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An economic forecaster has warned that certain Australian cities look likely to be in oversupply in the mid-term.
Speaking at BIS Shrapnel’s Business Forecasting conference in Sydney last week, BIS Shrapnel managing director Robert Mellor warned against a widespread belief that Australia is massively undersupplied in the residential sector, with a lack of dwellings across the country.
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“The impression is given that this is the same across most markets. That’s not the case. In fact you could argue in terms of the number of states and cities, there are more markets [that will] be in oversupply in the next 18 months to two years than in undersupply."
However, he noted that “fundamentally” BIS Shrapnel cannot foresee Sydney being in oversupply territory within the next five years.
There is a “significant risk” that in the next 12 months to two years inner-city apartments in Brisbane will go into oversupply, with building levels two to three times higher than they have been on average in the past 10 to 15 years.
Perth is likely already in oversupply, Mr Mellor said, and the smaller markets of Tasmania, the Northern Territory and ACT are all experiencing “significant oversupply”, he added.
Similarly, BIS Shrapnel’s associate director Kim Hawtrey said he believes the home-building boom in Australia is peaking.
“Booms are mesmerisingly, hypnotically, trance-inducingly, spellbindingly seductive. And when you’re in a boom, you think it’s going to keep on going forever. Like Sunday afternoon, it’s a little bit seductive – but Monday morning is coming,” he said.
