City Apartments to become the market darlings? May 2005 RETURN
We have long suggested the market for selected city apartments has an underlying demand under pinned by the government push to get our population to utilize inner city infrastructure. The trend to live in town in smaller holdings will be further strengthened by the spin off from outrageous state land taxes. In the past 18 months we have seen a segregated apartment market split between quality offerings and those lacking in true property credentials. Whilst the latter have suffered in the market place the high end offerings have performed tremendously. Alternatively many dubious projects have even been scrapped by nervous developers. This reduction in supply will start to effect this market in the coming 18-36 months. The market peaked with 4500 new apartments offered in 12 months yet only 1100 in 2004. These recent projects are in the main quite successful. Importantly resales have expanded and with the docklands increasing by an outstanding 18%. Property analysts Charter Keck Cramer have even predicted a shortage of new apartments with-in 2 years. It is worth noting that the market has a tremendous capacity to right itself when conditions become imbalanced. The correction seems well under way. From an over heated market that provided unnecessary support for b grade property it reverted to an overly cautious phase. Now the happy medium seems to be approaching, quality property will do well and anything less will be treated harshly by the market. These are the conditions that allow sound long term property strategies to be very effective.
We have long suggested the market for selected city apartments has an underlying demand under pinned by the government push to get our population to utilize inner city infrastructure. The trend to live in town in smaller holdings will be further strengthened by the spin off from outrageous state land taxes. In the past 18 months we have seen a segregated apartment market split between quality offerings and those lacking in true property credentials. Whilst the latter have suffered in the market place the high end offerings have performed tremendously. Alternatively many dubious projects have even been scrapped by nervous developers. This reduction in supply will start to effect this market in the coming 18-36 months. The market peaked with 4500 new apartments offered in 12 months yet only 1100 in 2004. These recent projects are in the main quite successful. Importantly resales have expanded and with the docklands increasing by an outstanding 18%. Property analysts Charter Keck Cramer have even predicted a shortage of new apartments with-in 2 years. It is worth noting that the market has a tremendous capacity to right itself when conditions become imbalanced. The correction seems well under way. From an over heated market that provided unnecessary support for b grade property it reverted to an overly cautious phase. Now the happy medium seems to be approaching, quality property will do well and anything less will be treated harshly by the market. These are the conditions that allow sound long term property strategies to be very effective.