The sentiment in Sydney’s unit market has somewhat improved, according to JLL Australia’s Australia Residential Research for July.
The improved sentiment and access to finance pushed a significant rise in clearance rates in the market, which should see unit prices reaching a trough soon, according to the report.
The unit market in Greater Sydney remained under pressure, with an increasing vacancy rate during the March 2019 quarter. It is unclear whether the vacancy rate in the capital city has peaked, according to the report.
The number and value of commitments also dropped for both owner-occupiers and domestic investors over the 12 months to May, according to the Australian Bureau of Statistics (ABS).
Sydney’s median gross rental yields increased marginally year-on-year to 3.9%, but remained below other capital cities, JLL’s report showed.
The unit construction levels in Inner Sydney also dropped and will remain subdued for the medium term, the report predicted.
The number of units currently under construction in Inner Sydney is little over 10,200—almost 40% less than a year ago. The number of apartment completions is poised to further decline, with units currently being marketed falling 57% over the year to 2019, the report showed.
The number of projects with development approvals also declined by around 15% because some projects were abandoned or resubmitted plans for approval, resulting in the number of units with plans submitted reaching 4,900, according to the report.
The number of apartment completions in Inner Sydney increased in the second quarter of 2019, with 2,430 units completed. This brings the total number of completions to over 3,700 for 2019, the report showed. The number of completions in the June 2019 quarter is almost 15% below the completions during the June 2018 quarter. This trend will continue throughout 2019, the report said.
There are 3,600 units due for completion by the end of the year. Should they be completed, the total for 2019 will reach over 7,300 apartments—30% lower than 2018, the report showed.
Market conditions will remain low as previously high supply levels are absorbed and the absence of foreign investors keeping off-the-plan-sales rates low.
