Although some are travelling smoothly, most capital cities and regional areas are expected to continue on their bumpy journey in the short to medium term, new data shows.
Research of capital cities and regional centres by Propertyology reveals that property markets are expected to move in many directions for the next three years as some markets are experiencing oversupply while others are set for undersupply.
“Housing supply at a macro level saw an average of 170,577 additional dwellings completed each year over the past decade. The average annual dwelling supply over the last four years was 200,034 — significantly more than the 10-year average,” said Simon Pressley, Propertyology’s head of research.
Sydney and Melbourne
Looking into Sydney and Melbourne, Mr Pressley said that these popular states have been responsible for inflating overall housing supply figures over the last three years.
Currently, both states are facing oversupply because of falling property prices, rising vacancy rates and steadying rents.
“As for future supply, while there’s been a slight easing in Sydney building approval volumes over the past 18 months, it’s still well above historical averages,” Mr Pressley said.
“Of even more concern is the spike in Melbourne’s building approval volume over the past 12 months. While it’s highly likely that many of these projects, especially high-rise apartments, will be put on the shelf for a few years, developers don’t lodge building applications for practice.”
Through analysing building approvals, Mr Pressley has identified the suburbs that are likely to underperform because of oversupply, with apartments in these areas expected to see the biggest declines.
In Sydney, the list includes Rockdale, Sutherland, Caterbury, Liverpool, Ryde, Hornsby, The Hills, Blacktown, Parramatta, Botany Bay, Leichhardt, Marrickville and Camden.
In Melbourne, these suburbs include Melbourne City, Boroondarra, Yarra, Glen Eira, Whitehorse, Casey, Cardinia, Maribyrnong, Darebin, Moreland and Hume.
Brisbane and Perth
Brisbane is showing signs of restabilising supply after experiencing an oversupply.
“The 7,718 apartment approvals last financial year in Brisbane represent half of the 15,835 approved two years earlier, but [the number] is still well above the 4,500 apartments or less per year prior to 2013,” Mr Pressley said.
“On the whole, though, Brisbane’s housing supply stock is back close to equilibrium.”
Perth is also showing signs of restabilising after dwelling approvals have been in a state of decline since 2014, but Mr Pressley cautioned against thinking the market was in “tip-top shape”.
“Perth’s population growth of 20,000 people last year is well down on the 50,000 per year that it typically produced between 2007 and 2013. The good news is that WA’s economy has stabilised and there’s signs of better years ahead,” the head of research said.
Adelaide and Darwin
Rising confidence levels in Adelaide has been responsible for the state’s rise in building approvals, but the number has come from a low point between 2010 and 2013.
Meanwhile, Darwin’s low housing supply was described by Mr Pressley as being a sign of its current property market condition.
“Darwin’s retraction is reflective of the recession that Propertyology has been concerned about in the top end for a few years,” Mr Pressley said.
Hobart and Canberra
Hobart’s supply is currently not able to meet its demand and is facing rising dwelling approvals.
Mr Pressley added that Hobart is also experiencing the tightest vacancy rate of all capital cities while also experiencing the second best March quarter for population growth.
New housing in Canberra is seeing strong demand, but Mr Pressley is cautious about this market as new supply consists of more units than houses.
“Canberra is not as cosmopolitan as global cities like Sydney and Melbourne. The very large volume of apartments being constructed is more a reflection of Canberra’s demand for temporary residents while training at an academy or filling a government employment contract for a few years,” the head of research said.
In regional areas outside of capital cities, housing supply is facing fluctuation levels similar to inside capital cities.
“Strengthening local economies in many regional towns and cities, combined with a 78,000 national increase in regional population last year and affordable housing, means demand continues to rise,” Mr Pressley said.
“The surplus housing stock from four to five years ago has been soaked up in locations such as Mudgee and Muswellbrook (NSW); Latrobe (Victoria); Mackay and Rockhampton (Queensland); Geraldton, Karratha and Mandurah (WA); Port Augusta, Whyalla and Port Pirie (SA).”
Regional areas experiencing equal levels of supply and demand, according to Propertyology data, include:
- Alice Springs
- Coffs Harbour
- Fraser Coast
- Margaret River
- Mount Gambier
- Port Lincoln
- Port Macquarie
- Wagga Wagga
Meanwhile, regional areas that could see an oversupply over the new few years include:
- Gold Coast
- Sunshine Coast