Sydney apartments face pockets of oversupply
The Sydney apartment market is showing early signs of oversupply, an economist has claimed.
Domain Group senior economist Andrew Wilson has pointed to a significant jump in the vacancy rate in Parramatta as signs of an oversupply in the area. Sydney saw its apartment vacancy rate increase 0.2% in May to 2.2%, while Parramatta saw a 0.4% jump to 2.4%.
“It’s a big rise in the vacancy rate over just a month, but really it’s no surprise given the extraordinary level of development there,” Wilson said.
Wilson said the bulk of apartments are yet to come onto the market, with the supply “accelerating rather than decelerating”.
Just Think Real Estate agent Edwin Almeida told Domain the issue of oversupply wasn’t restricted to Parramatta, with oversupply problems extending to Homebush West, Campsie, Bexley and Hurstville. Aleida forecast that Parramatta would see its vacancy rate continue to rise, eventually hitting 3.5-4%. Domain said an additional 8,000 apartments were announced in November 2015 for the Parramatta River corridor. New South Wales saw a 7% increase in apartment construction in April.
“Rent is coming down slowly and landlords who don’t decrease their rent will stay on the market for longer,” he said.
But Wilson said pockets of Sydney faced oversupply, rather than the entire city. He predicted that tenants would eventually move from undersupplied areas of the city to those with oversupply.