Australia’s governments seek to ‘solve’ the housing crisis by forcing residents into high-rise apartments.
However, high-rise apartment approvals have collapsed, as shown in the chart below:
Since their 2015 peak, high-rise apartment approvals have dropped by 63% across the country, with New South Wales (-74%), Victoria (-68%), and Queensland (-60%) leading the way.
Sydney developer Luke Berry, founder of Thirdi Group, cautioned that the persistent supply shortage and increasing population demand would drive dramatic increases in apartment prices in the coming year.
“Very few apartment projects are going ahead at the moment because it’s very hard to make them stack up due to high costs, so there’s going to be bigger supply issues in the next couple of years”, Berry said.
“I think as soon as interest rates start to fall, maybe middle of next year, there’s going to be renewed interest in new apartments and there’s not going to be enough supply”.
According to CBRE’s most recent forecasts, the national apartment supply will average 50,000 units per year between 2025 and 2029.
This level of building would be around half that of last decade’s peak, and it would be far lower than the rate of supply required to keep up with the expected population increase.
Given the cost increases since the pandemic, CBRE predicted that apartment prices would need to climb dramatically to make construction viable for developer.
Source: Macro Business
