New home building in Sydney is now at a 16-year high, according to the latest figures from the NSW Department of Planning & Environment.
More than 30,000 new homes were completed in Sydney during 2015/16, a 10.4% increase from the previous year.
Multi-units now account for two out of three new homes within the Sydney area.
This is good news for brokers, Shane Garrett, senior economist for the Housing Industry Association (HIA) told Australian Broker
, thanks to the increased number of new homes now coming out onto the market.
The turnaround partially made up for a decade’s worth of under-building in Sydney.
“Sydney has chronically suffered from an undersupply of property over recent years. From 2002/3 over the following ten years, building in the Sydney market was pretty depressed.”
However, Garrett said that Sydney needed to further grow its housing numbers with dwelling price growth and rental vacancy rates showing signs of high supply/demand pressures.
“Supply still has much to do to make up for the years of under-building that we had.”
Demand had remained strong because of population growth and a strong labour market, he said.
“It is important that Sydney’s dwelling stock expands in order to accommodate the strong, migration-driven growth in the local labour market.”
He added that the strength of this trend was also driven by low interest rates.
“The low interest rate environment is guiding people into purchasing their very first home or for those who have already bought, guiding those people into maybe upgrading and upsizing. That’s creating huge demand pressures on Sydney dwelling stock as well.”
Despite these positive trends, Garrett pointed out that there were two sides to this Sydney story.
“The amount of actual transaction of established homes has fallen off quite a bit over the past year. While we’ve been seeing very good figures for new home building in Sydney, this has been counterbalanced by a significant reduction in the number of established homes that are being sold in the city.”