Oversupply of Apartments Threatens Property Market

Fresh data indicates that Aussie homes could be heading for a price crash. Building approvals haven’t shown any signs of slipping in recent months. With apartments leading the charge.

However, rather than a sign that demand is strong, it could be symptomatic of a cooling market. As News.com.au explains:

‘…what could drive such a big uptick in building approvals is the sense that it is now or never.

Builders who have just got their approvals will be racing to get their apartment blocks and new developments done before everyone else. Those who finish early can hope to get in before prices really slump. Any who have delays will be worried they’ll end up selling into a soggy, lifeless market.

It certainly fits the trend surrounding the market lately. Last week saw another 0.1% price drop among most capital cities. With Melbourne the only one to remain on par, left unchanged.

Bigger problems ahead?

It marks an overall 0.3% drop over the past month nationally. A worrying indicator that perhaps the property market is headed south. And that could have further reaching ramifications for our economy as a whole:

The big question hanging over Australia’s high housing prices is whether a housing downturn can happen without also crashing the economy. A gentle and controlled downturn might be a positive — young people can afford to get into the market more, but people don’t feel like the sky is falling.

But a severe sharp downturn could be different. A giant backlog of supply that could be released into an already weakened market is a concern because it could accelerate a modest slide into a hard one.

It’s certainly going to be an interesting couple of months. Let’s just hope that a decade after the global financial crisis we don’t see a repeat.

Though if our very own Phil Anderson is right, property investors have nothing to worry about. He believes that the market won’t top out for years. Find out all there is to know, in his latest report right here.

Regards,

Ryan Clarkson-Ledward,
Junior Analyst, Markets & Money


Ryan Clarkson-Ledward is a junior analyst for Markets & Money. Ryan has degrees in both communication and international business. His priority is bringing you the latest price updates on stocks through ASX updates, as well as supporting Sam Volkering with background research. As part of the team at Markets & Money his aim is to provide unbiased and relevant news for readers. Ryan’s work with Sam is designed to provide research that complements Sam’s analysis for small-cap and technology stocks. Together, their objective is to break through all the jargon and give you the hard facts to inform your investment decision-making. Ryan writes for:


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