Apartment construction could collapse

Adam Smith 1 August 2016

apartment constructionA “tsunami” of apartment supply will eventually see multi-unit construction collapse, an economic forecaster has predicted.

The Building in Australia 2016-2031 report by BIS Shrapnel has claimed multi-unit residential construction could fall by 50% by 2020. The forecaster said a boom in construction is set to “run out of steam” in the coming year.

“After recording strong growth during the past four years, we estimate that total dwelling starts reached an improbable 220,100 in 2015/16, an all-time high,” BIS Shrapnel associate director Kim Hawtrey said. “From this level, national activity is forecast to begin trending down over the following three years, with the high-flying apartments sector leading the way down.”

Hawtrey predicted all major markets would shift into oversupply, with the exception of New South Wales.

Low interest rates have unlocked significant pent-up demand and underpinned the current boom in activity, but with population growth slowing and a strong backlog of dwellings due for completion, new supply will outpace demand,” Hawtrey said.

While New South Wales is set to remain undersupplied “for some time yet”, Hawtrey predicted Sydney would also see a slowdown in home building in the coming 1-2 years.

BIS Shrapnel’s prediction echoes warnings from CoreLogic that the apartment market is headed for oversupply, potentially putting settlements at risk. BIS Shrapnel has previously predicted that oversupply will see house prices fall across all capital city markets by 2019.

More help from finder.com.au

Ask a Question

You are about to post a question on finder.com.au

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Disclaimer: At finder.com.au we provide factual information and general advice. Before you make any decision about a product read the Product Disclosure Statement and consider your own circumstances to decide whether it is appropriate for you.
Rates and fees mentioned in comments are correct at the time of publication.
By submitting this question you agree to the finder.com.au privacy policy, receive follow up emails related to finder.com.au and to create a user account where further replies to your questions will be sent.

Ask a question