As the industry prepares for the final report of the Hayne royal commission, tighter credit conditions and negative sentiment continues to affect the apartment market, with developers struggling to get projects off the ground.
Sydney’s apartment market is now well into a downturn, while Melbourne is slowing rapidly, JLL’s Apartment Market Report for the third quarter revealed.
The supply pipeline in the apartment market reduced slightly in the third quarter, as projects completed in the period far outweighed new project commencements.
JLL expects headwinds in the apartment market to remain strong in the short-term putting further pressure on prices and rents across the next 12 months due to credit constraints, but the report is optimistic about the outlook in two to three years.
“It is important to note that this is largely a credit-driven slowdown in the market,” JLL’s head of residential research Leigh Warner said.
There were 44,300 apartments under construction across the five major capital cities at the end of the September quarter, down by around 1,400 apartments since the end of last quarter, reveals the report.
The drop was most acute in Sydney where apartments under construction dropped by 2000, while the pipeline also shrunk in Melbourne.
However, this was somewhat offset by rises in construction recorded in Adelaide and Perth.