Peak oversupply in Sydney / Melbourne will hit in about 6-10months

"The only time I have seen real property asset downturns is when there has been an oversupply - in the recession in the early 1990s there was a massive oversupply of office and industrial," Mr Harrison said.

Read more: Warnings on oversupply shopping centres and apartments
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My only property asset in Sydney is a 19th century terrace house in a city fringe location. Are you saying that I will never experience a downturn?

 

I don't understand what the problem is. We have been complaining about an apartment oversupply for 18 months or more.

This affects Sydney, Melbourne, Brisbane and Perth.

What about Brisbane and Perth @DowntownBlock? Surely they at at risk of apartment oversupply too?

Edit: checked the article again and it's there:

"In the overbuilt areas of Melbourne and Sydney and Brisbane, there is a lot of rubbish that is coming through there," he said.

Read more: Warnings on oversupply shopping centres and apartments
Follow us: @FinancialReview on Twitter | financialreview on Facebook

 

The article references a number of insights from Property Council of Australia's annual congress in Cairns. .. It's actually quite balanced.

The hostility towards negative data on here - wow

 

Ignoring my post, which was not at all hostile.

It's not like this is something new. People have been warning about apartment oversupply on the east coast for years. Example:

QLD - Brisbane oversupply?

 

in my opinion - there is a lot of rubbish apartments coming out in Melbourne - (hence why they created the apartment design standards recently). A lot of them on Doncaster hill and many parts of CBD. But either way ppl still look at ways to make some coin out of them many atm through short term leasing airBNB.

If you look at the median apartment market in Melbourne (on a whole - from million dollar - to the shoebox student apartments) generally it has always been flat for the last decade plus - so what else is news? But unlike other cities which has oversupply - they just market it out and keep selling. like the one in southbank 400 apartments sold over the opening. saw this one in CBD today by spring st. Mainland commmie money - nah.

 

Cheers. . . I guess this article highlighted the direct example that serious downturns require serious oversupply and it can then flow through to detached houses.

Saw last night that apartments in Brisbance will increase by 25% in next 12 months...

 

What else is news is the material impact that acute oversupply has had previously on overall values... and whether ppl actually realise this?

Always great to listen to some old heads who have seen a couple of cycles...

 

not really an old head probably younger than you
But that's apartments man - though things are still selling on the ground

in btw how many auctions you been to in Melbourne Sydney over the last month?

 

You didn't respond to my point..any thoughts on this?

" this article highlighted the direct example that serious downturns require serious oversupply and it can then flow through to detached houses . . .

Saw last night that apartments in Brisbance will increase by 25% in next 12 months..."

 

those area paid only subscriptions for ppl like yourself haha

It depends if you have read the Melbourne 2030 plan and also on the suburbs that is likely to impact.(H&L mostly likely will be hit first if the high population growth slows down). How much supply and development will be dictated on which areas are zoned for growth, has infrastructure, schools, universities etc and which areas have restrictions. if you're telling me than a house say 150m from Balwyn high school will drop in price by 25% - very very unlikely (coz every rich commie will be eyeing it like a great white eyes blood)

I do recall in 2004/05 there was a serious downturn in apartments (southbank dropped 20-25%). but then it went back up again over the years. There was oversupply. rentals were not as tight as it is now. But a lot of infrastructure is happening in Melbourne as you would know. railroad crossing removals, the underground stations domain, arden to cope with the growing population. New schools are opening just about everywhere from the likes of pt cook down to southbank.

rather than always posing open ended questions (not really cute haha) - how abt you answer some for a change ? how many auctions you been in the last month in melb or Sydney - you did say you wanted to see sentiment?

 

I agree. I think Melbourne is much better placed for growth than Sydney.

Sentiment is a lot stronger in Melbourne than Sydney currently... Although prices have already been dropping in Sydney - so what came first poor sentiment or price drops? Chicken or the egg scenario in Sydney.

Yep been to a few auctions recently, haven't seen more than 2 active bidders at one time.. also hard to tell too much about buyers etc if one doesn't speak mandarin!

 

Sentiment before price. Vendors will cling to asking prices of a few months ago with some determination, and there's often a "greatest fool" who will pay them. In every downturn, price drops are the last piece of evidence, following falling auction clearances, more days on market, fewer buyers. That's why indicators like CoreLogic's hedonic index will always underestimate the rate of decline.

 

Yep I wonder if we will look back on PurpleBrick entry in market as peak of market? or Mgrath listing on ASX...

 

Cheers Y- man.. I thought it pretty balanced article too..

The declining stock market would certainly have an impact on residential demand too... using most measures eg shiller cape etc the US stock market has only been valued higher in 1929 and 1987!

Good point re commercial leases... luxury of the lag affect as long as one can avoid listed issues!

 

Same approach I'm taking mate. Our time is too precious to waste.

 

Falling Sydney prices and still rising building approvals....


What the data says about Sydney’s sky-rocketing building approvals

 

So unit approvals has peaked while houses approvals have stalled/ are in decline.
How is this bad for house prices?

 

I wonder how older units will stack up against the new stock, if for example those older units are larger sqm-wise with more parking spots and storage than what'd you get these days (2bed, 1 or no car spot). Or is this not really a big factor in overall price.