Up to 200,000 jobs could fall victim to apartment crash

Adam Smith 21 October 2016

unemployment arrowThe predicted slowdown in apartment building could put 200,000 jobs at risk, new research has suggested.

A new report by Morgan Stanley has forecast that a potential slowdown in apartment construction could see unemployment rise to 6.5%. The report predicted a “sharp slowdown” for apartment developments, along with a further deterioration of the rental market.

According to the report, the apartment market is headed toward an oversupply of 100,000 units. This oversupply, the report said, would largely be seen in Brisbane, Melbourne and Perth, though Sydney could also be at risk due to a boom in apartment building. Morgan Stanley said the slowdown in demand was due to reduced investor appetite and tighter credit restrictions, which could put a sudden halt to new building projects. The investment bank also forecast rental vacancy rates to rise to 4.5%.

The report warned a “negative feedback loop” could occur, with developers facing insolvency as valuations fall and purchasers walk away from their contracts. Morgan Stanley said this could cause a “shock to employment”, as well as eroding wealth, confidence and spending.

This “negative feedback loop”, the investment bank said, could translate to a 33% decline in apartment construction, putting 200,000 jobs at risk.

Latest home loans headlines

Image: Shutterstock

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