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City apartments 'built at recor...

City apartments 'built at record rates'

Residential apartments are being built at record rates in all of the major Australian cities, it has been revealed. 

Angie Zigomanis, senior manager at industry analyst and economic forecaster BIS Shrapnel, explained that strength in investor demand has been the catalyst for this trend. 

Residential house prices are forecast to remain relatively stable for the remainder of 2016 and into 2017, according to the latest report from BIS Shrapnel, which was authored by Mr Zigomanis. 

"In fact, nearly all capital cities are building apartments at record rates on the back of the recent strength in investor demand," he remarked. 

Reduced population growth and increased dwelling completions could lead undersupplied markets to tip into oversupply this year, the study revealed. 

It was indicated that work on a record 220,000 new dwellings commenced in the period from 2015 to 2016 - and this could translate into a new peak in dwelling completions for the next 12-month period. 

An estimated 49 per cent of these building projects are set to be multi-unit dwellings, with many larger apartment buildings subject to longer construction time frames. 

This is set to translate into further strong completion rates for the period from 2017 to 2018. 

This total dwelling construction compares with an average underlying demand for 159,200 new dwellings every 12 months over the coming five years. 

Some concerns were raised that this could lead to oversupply, which could have a downward impact on property prices in Australia's major cities over the next three years. 

New dwelling activity in Sydney has now started to run ahead of underlying demand. Strong population growth - underpinned by healthy overseas migration inflows in New South Wales and low interstate migration outflows - mean that the dwelling deficiency is being absorbed at a larger-than-expected rate. 

"Completions will continue to rise and the slow erosion of the deficiency will alleviate some of the pent-up demand pressures in the market,” Mr Zigomanis commented. 

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