Forecast for Inner Sydney’s Apartment Market

In an article for Your Investment Property, Miriam Bell educates us on the longevity of the boom period for the Inner Sydney apartment market. Industry analyst BIS Shrapnel says that the median price growth is expected to rally around 6% for the coming two years and this will facilitate boom for inner Sydney’s apartment market for at least the foreseeable future.

What is triggering investor demand?

Investor demand is fuelled up by consumer sentiment which is riding on low interest rates and low vacancy rates. Off-the-plan construction figures are robust and this may well turn out to be another indicator of growth. Oversupply is a threat; what with additional levels of stock lying with inner Sydney.

An array of apartments under construction

5,800 apartments are already under development in the Inner Sydney area and only in the next 3 years; in excess of 11,000 apartments are likely to come up. We have witnessed dull demand for new apartments for over a decade now. The tide is likely to change now as the market comes in its “catch up” phase.

Investor demand will be strong in coming years, quotes BIS Shrapnel report but it will still not match strides with the pace at which apartments will be built. This way, the vacancy rates will only rise and rental yields will likely decline.

You can read the original article here.

Things look good but we must be on the guard

I was just going through the latest auction clearance figures for Sydney. In fact, the city and the east have recorded something like 95%. I add to this the swell of off-the-plan properties and the impression I get is, well, could things go better? But we have to remember that each property cycle hits many different stages and for some time now (barring counter-cyclic movements that are few and far between), we should ready ourselves for the consolidation phase.

‘Boomish’ rallies will meet with price correction and capital growth will mellow down to sustainable levels. And yes, lest I miss out, I completely agree with Bell where she talks about guarding against possible oversupply in the Inner Sydney area.

Where precisely in Inner Sydney do you propose to buy?