The construction of new apartments is supposed to halve over the next three years, after the recent building boom.
High density apartments will see the sharpest decline, according to BIS Oxford Economics’ Building in Australia 2017-
2032 report. However, Robert Mellor, BIS Oxford Economics managing director, doesn’t expect the drop in residential building to be enough to curb an expected oversupply. The report expects Australia will have an oversupply of as many as 31,000 homes by next year.
“They thought high population growth was driving really high demand… but they overdid it and kept building and oversupplied the markets” Mr Mellor said.
There will be some price declines,” he added. “… it will be a correction, not a collapse, we’re not talking about prices falling by 10 or 15 per cent.” Melbourne and Sydney could see price falls of up to 4%, despite an overall shortage of homes, due to oversupply in specific suburbs. Brisbane is also likely to continue seeing declining prices, he said.
NSW will have the largest shortfall with unmet demand for over 16,000 homes. The state will also see a 32% decline – the highest of any state – in the value of commenced residential homes.
