Glut of New Home Supply Coming to Market

[whatnext]

The more one reads about Australia's property market the more similarities you see with Canada's, with Sydney and Melbourne standing in for Toronto and Vancouver:

The Australian dream died alone in an apartment

...with Sydney's property market now falling 11.1 per cent in its sharpest downturn since the 1980s - a trend mirrored nationwide - the shift toward high-rise apartments risks a further leg down in a real-estate crash that's starting to threaten the economy.

To see why, consider the differences in how houses and apartments are built and bought. A new house can be constructed in as little as six months, compared with as much as five years for major high-rises.

Even before that stage, there's a process of seeking planning approvals, which tends to be longer with high-density developments. On top of that, getting the financing to build residential towers is normally contingent on pre-selling a certain share of the block, further delaying matters.

As a result, an apartment-heavy property market is a lot less nimble in responding to shifts in demand and credit conditions than one dominated by single-family homes.

Towers planned five years ago when the market was red-hot may just be taking the scaffolding down now, at a time when things are looking dicey.

That's reason to think worse is to come for our housing market. So far, the lower price brackets in which apartments dominate have been relatively unscathed by the current rout. In Melbourne, for instance, the cheapest decile is down just 0.6 per cent from its peak, compared with a 13.9 per cent fall in the costliest decile, according to real-estate data provider CoreLogic.

These conditions probably reflect credit tightening by major lenders. Since apartments are generally cheaper than houses, purchases are less dependent on the availability of homeloan financing. But the vast overhang of units nearing completion may change that dynamic....

https://www.smh.com.au/business/the-...12-p50qzh.html

[s211]

Originally Posted by fredinno

The suburban mindset is generally viewed in as "Americanist". Canada is way more like its southern neighbour than a lot of people want to admit.

So, North Americanist then.

[trofirhen]

Does this onslaught of extra homes coming onto the market mirror what is happening in Seattle? And if so, is it for the same reasons?

[misher]

Originally Posted by trofirhen

Does this onslaught of extra homes coming onto the market mirror what is happening in Seattle? And if so, is it for the same reasons?

Seattle’s glut is more rental market focused. They also don’t have our taxes and regulation slowing sales down. But partially yes.

[fredinno]

Originally Posted by s211

So, North Americanist then.

Not sure if you should include Mexico in that mindset, that's the thing.

[Jebby]

Originally Posted by fredinno

Not sure if you should include Mexico in that mindset, that's the thing.

Absolutely you should. Suburban sprawl/drive everywhere lifestyle/big box strip mall development is a huge issue here as well.