Ghost towers are springing up across Sydney.
Now just to make things clear…they’re not haunted, just packed with empty apartments as developers continue to release new high-rise homes into a saturated unit market.
26,000 new apartments will hit the Sydney property market this year, adding to the 28,000 apartments built in 2018.
In other words, by the end of this year around 54,000 new apartments will have flooded the Sydney market over a 2-year period. This has obviously led to an oversupply of apartments for sale and for rent.
And this couldn't come at a worse time as buyers are losing confidence in the new apartment market because of concerns of poor workmanship haunt buildings in a different way.
To get a better understanding of what’s going on and what it means to property investors I get the lowdown from Dr. Andrew Wilson, Australia’s leading housing economist and chief economist of MyHousingMarket.com.au
Watch as we discuss:
• There are currently too many new apartments on the market in Sydney leaving a glut of apartments for sale and to rent
• The plan to get more first homebuyers into the market seems to have worked. Now, one in four people in the market are buying their first home but it hasn't been enough to soak up the extra supply of apartments, with "ghost towers" on the rise in Sydney.
• What’s happening to vacancy rates in Sydney.Overall Sydney’s vacancy rate sits at around 3.4% - the highest since records began in 2005 and this could end up as high as 4 per cent by the end of the year. But in suburbs like Carlingford, where there has been overdevelopment – the vacancy rate is almost double that at 6.3%. In the Hills District in north western Sydney are sitting at 5.8% with some locations even being as high as 7%.
• Sydney tenants are spoiled for choice and have an upper hand in rent negotiations after years of being at the mercy of landlords, who just two years ago could easily hike prices because only 1.7 per cent of Sydney rentals were available.
• There’s also an oversupply of new apartments for sale. There are almost 14,000 apartments available for sale in Sydney at present, double the number (7,000) for sale in 2017.
• How the market is being artificially propped up by developers “manufacturing” scarcity by holding on to stock and not releasing their unsold apartments into a saturated market. At the same time some investors, particularly foreign investors, are not putting their properties on the market keeping them “brand new” waiting for better times, or just as a store of value
• We’re not building the right stock. Buoyed by hordes of foreign investors and a new generation of local investors who didn’t really understand what made a good investment, developers built high rise apartments aimed at these investors in suburbs traditionally dominated by traditional single level houses.
With thanks to PropertyUpdate.com.au and MyHousingMarket.com.au