Residential construction falls in Sydney, but Melbourne booms – AFR, 28 March 2019.
Apartment building has dropped to its lowest level in four years in Sydney, the country’s biggest builder of units, even as infrastructure and commercial work expands to keep overall construction activity at an unprecedented high level, RLB’s latest count of cranes across the country’s skylines shows. Michael Bleby, Senior Reporter, AFR
You can read the full AFR article here.
So what does it all mean?
The RLB Crane Index is a site which measures building activity by counting the number of fixed cranes in capital city skylines.
And to put it simply, lots of cranes = lots of commercial (sky scrapers) or residential (apartments) building.
Tracking from a commercial sense, one indicator we use is how the economy and infrastructure of that town or city is tracking.
In Sydney’s case, with the reduction in cranes in the sky, it simply means that in the residential space, developers are pulling the projects because of the oversupply of apartments already in existence.
The devil is in the detail in the AFR article as it focuses on building approvals increasing or decreasing only. This doesn’t give you a truly accurate supply and demand ratio.
So how does this play out for the end buyer and what are the risks involved?
If you have committed to an off the plan apartment which is to be completed within anything from 18 months to 2 years from the time of committing, the supply issue could be prevalent due to the increasing number of apartment blocks being built through that period.
One other risk to note, is finance conditions tightening meaning you may not be able to gain finance approval when your apartment is complete.
If you want to learn more, give me a shout. You can reach me via email at john@solverewealth.com.a