Apartment commencements in NSW were down 40% in the March 2022 quarter from the December 2021 quarter and dragged overall dwelling commencements down 19%.
ABS data released last week, showed apartment approvals in NSW 63% below their peak. This is of particular concern as almost 9,000 apartments approved in NSW, have not yet commenced construction, due to the difficulties in the apartment market.
The lead time from approval to commencement of an apartment project is increasing and with a longer build time, low approvals during 2019-20 are driving this poor result – completions are now sitting 58% below its 2018 peak.
Source ABS July 2022
With apartments traditionally making up around two-thirds of the supply of new homes in NSW, lack of supply is exacerbating the housing affordability crisis, which could get worse as immigration returns and interest rates continue to rise.
“Without a healthy apartment market in NSW, the home ownership rate will continue to fall, and we will see more people living in poverty,” said Steve Mann, CEO, UDIA NSW.
As highlighted in the UDIA Apartment Supply Pipeline Report, given the backlog of unsatisfied demand and the lead time of 2 to 3 years to deliver completions, government should deliver policies to drive commencements now, which can support jobs and assist in the economic recovery we all want to see in NSW post the COVID pandemic.
“In short, if we continue along the current trajectory and do not increase apartment commencements now, Sydneysiders will be paying permanently higher rents and prices. To improve affordability, we need to increase apartment supply well above the current anticipated rates,” Mr Mann added.
UDIA has been calling for a communications campaign explaining the extra protections the NSW Government has put in place for purchasers of new build apartments to improve consumer confidence and help support pre-sales, a critical element in getting approvals turned into completions.
Deanna Lane 0416 295 898 or firstname.lastname@example.org