Australia’s largest capital city will need in excess of 30,000 new dwellings this year to cater for its growing population, according to a leading researcher.
Louis Christopher, managing director of SQM Research, said at the Property Council of Australia Residential Outlook 2014 earlier this week that in order to meet the needs of the city’s growing population and underlying and investor demand, Sydney needed to get building.
“The bottom line is that what we need effectively is another 33,000 dwellings this year in Sydney to meet demand,” he said.
“Now what is the reality? The reality is if we don’t build this, we’ll just see more people grouping together and living together.”
Mr Christopher said other market commentators believed the number of occupiers per dwelling in Sydney was going to continue to fall, however recent Census data indicates this has stopped happening.
When pushed on how much new stock would be required to curtail Sydney’s price growth and stabilise capital gains to be back in line with wage growth, Mr Christopher said there were a number of forces at play.
“There is underlying demand and there is investor demand. Investor demand is what’s really been driving the prices up over the course of last year and into this year.
“What would it take to meet that investor demand on top of underlying demand? Well right now, sure if you suddenly dumped 20,000 properties on the market that might suddenly do it.
“But I would say that 50,000 properties a year in New South Wales might taper the price growth.”
Mr Christopher urged investors and home buyers not to worry about Sydney experiencing unsustainable price growth though, saying Sydney was far more overvalued in the early 2000s and prices are now simply playing “catch up”.