The number of apartments being built in Sydney will overtake Melbourne this year, but property players in the southern city say Melbourne will remain Australia’s apartment-investment capital.
“Sydney is on fire, but it is coming off a low base. I think it is too late to get into that market and it is now Brisbane which is at the point Sydney was at a year ago,” said Melbourne developer Michael Yates.
Building approval figures out on Monday showed apartment approvals rose almost 40 per cent in trend terms in December compared to the same month a year earlier.
At the end of last year, 17,461 units were under construction in Melbourne and 21,546 had been approved.
In Sydney, 14,595 units were under construction at the end of the year and 24,525 had been approved.
In contrast, when Melbourne approvals peaked at 25,217 in 2010-11, Sydney recorded 8614 approvals.
“Both Sydney and Melbourne are rapidly maturing global or near global cities with increasingly dynamic housing markets that are responding to affordability and lifestyle trends,” Mr Nathan said.
“It’s the old arch-rivalry, Sydney versus Melbourne, but Brisbane is a real sleeper worth watching also,” Charter Keck Cramer director Sam Nathan said.
Mr Nathan said the market drivers in Sydney, Melbourne and Brisbane were complex and different, largely characterised by Brisbane’s affordability, Sydney’s pent-up demand and Melbourne’s population growth and attractiveness to Australian and foreign investors.
In 2013, Sydney projects sold out upon release as supply flowed into a city starved of new apartments for a decade. On Saturday, more than $100 million worth of units in Bluestone Capital Ventures’ Woolooware Bay project in Cronulla sold in eight hours.
Urban Taskforce Australia chief executive Chris Johnson said NSW investors were confident, but stalled planning reforms would need to proceed if the market’s full potential was to be realised.
In November, planning minister Brad Hazzard said the state’s planning bill was on hold due to a stalemate with the Shooters and Fishers Party.
Victorian Planning Minister Matthew Guy said maturity in the inner-city unit market made the CBD an attractive place to live and invest. “Melbourne has the fastest population growth in the country and the fastest approval system in Australia. We have been very aggressive in our support of high-rise development in the city,” he said.
Mr Nathan said Sydney’s high prices could encourage young investors to buy in Brisbane instead.
Brisbane’s low vacancy rates, affordability and solid yields is expected to attract more investors this year.
Across the new housing sector, building approvals were up 1.5 per cent in trend terms and down a seasonally adjusted 2.9 per cent in December.
Kim Hawtrey, associate director at BIS Shrapnel said that in the December quarter, 51,000 dwellings were approved- the highest quarterly result for almost two decades.
All economists surveyed by Bloomberg expect the record low interest rates, which have buoyed the property market, to remain on hold before Tuesday’s Reserve Bank of Australia board meeting.
The RBA’s easing bias is expected to be dropped, effectively ruling out future rate cuts.
By Jayden Vecchio Google+