A shortage of city apartments is likely to be exacerbated as overseas borders reopen this year
A spike in migration this year is likely to exacerbate a shortage of city apartments after an extended period of below-average building approvals.
Government stimulus policies and the health attributes of detached housing caused houses to soar in popularity during the pandemic, becoming far more popular than higher-density homes such as apartments and townhouses, according to a report by The Australian.
The ebb in popularity for units caused developers in the capital cities to hesitate when it came to committing to new projects. About 76,000 townhouses and apartments were approved in the year to October – 12% below the 10-year average.
The lack of new development is likely to become more apparent this year as overseas borders reopen and migrants and international students return to the country, Housing Industry Association chief economist Tim Reardon told The Australian. Reardon said the COVID-19 pandemic has already caused the number of people living in apartments to shrink, increasing pressure on existing stock.
“We need to build more apartments simply to meet the demand, even with the same population that we had in 2019,” Reardon said. “I expect that after the next federal election, we will see a return to traditional levels of population growth regardless of who wins. That will see a growth particularly in demand for apartments, not so much for detached homes. We will also see people starting to be drawn back to cities, back to apartment living, as employment and education opportunities return this year.”
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Recent data suggests that apartment development in Sydney is picking back up, with greater approval numbers seen in the last few months of 2021, The Australian reported. It’s a different story in Melbourne, however, after a huge exodus from the city to the regions and other states.
“We’re seeing in Sydney at the moment developers looking through the haze of the pandemic to see there will be very strong demand for apartments when migration returns and … a shortage of other stock coming on the market,” Reardon told the publication. “Melbourne is a market we’re watching very closely. We will need to see some changes in demographics before … a return to strong demand for apartments.”
