Winter A Glut is Coming (Apparently)
You’ve probably heard the rumours by now. You know, the ones about a likely apartment ‘glut’ in Sydney? Well, some now fear that the same could happen in Canberra.
According to ABS statistics, construction work in both NSW and the ACT is on the rise in a pretty big way, with NSW construction having risen for six quarters, and the ACT figures showing a rise for two quarters.
Popular media appears to have jumped right on stats like this, with cries of “OMG the apartments are taking over!” ringing out left, right and centre. Sigh. Before we freak out, let’s discuss this properly.
Perspective spoke to Executive Director of Project Marketing, Wayne Harriden and Assistant Director of Project Marketing, Cassandra Cumberland from Independent Property Group to get their insights on the whole situation and shed some light on the reality of it all.
Erm… What’s a Glut When it’s at Home?
For those who don’t know the term, a ‘glut’ is essentially an oversupply of something—so let’s kick off this deconstruction by calling a spade a spade and referring to it thusly.
So if Sydney and Canberra were to experience an oversupply of apartments, this would basically just mean that there were more apartments on the market than there was demand for from buyers.
Avoiding Oversupply: Consultation and Planning Are Key
The good news is that in Canberra, developers have their finger on the pulse, with some going above and beyond to ensure their projects fit the market’s expectations and needs.
Some of the methods they use include community consultation, market research, comparison with past projects, analysis of past sales results and research into the wants and needs of each specific target market. But developers who really want to go the extra mile also have to try and predict future trends. This is because, by the time the development goes on sale (a process that can take several years), the market could have (and likely will have) changed.
Developers who embrace new technology and offer a high level of amenity (things like pools, gyms and shared leisure spaces) to add that little bit extra that can make a project stand out. Design is also becoming increasingly relevant. With much of the available stock following the traditional rectangular shapes, some more fluid designs are currently making their mark in developments such as Infinity Towers in Gungahlin.
Developers and Project Marketers also ask the question: above and beyond what people want, what does the market actually need? In a suburb with 5 high-rise apartment developments, all offering 1 and 2 bedroom apartments, all charging similar prices, where is the differentiation? A buyer could choose to buy into any of these developments and get the exact same thing. But if someone comes in and builds a selection of stunning 2 bedroom, double-storey townhouses with a pool in the complex… well now it’s a potential buying frenzy. See what we’re saying?
So it’s all a matter of being a clever little developer, knowing your market, and knowing your buyer. Of course, there are a number of other factors that come into play, and none of us have a crystal ball. But as the old saying goes: “if you fail to plan, you’re planning to fail!”.
So What Does Canberra Want?
Buyers in Canberra are quite discerning across all demographics. The first home buyer is looking for value for money, quality and amenities such as pools, gyms and the like. They also like technology and developments which offer something unique. Belconnen’s Wayfarer is a great example of this, with its stunning level 27 pool.
Downsizers, on the other hand, are looking predominantly towards the townhouse market (somewhat of a rare find in the current Canberra property landscape, might we add) along with apartments in established areas, such as Amaya in Griffith. They might look for something with a ground floor bedroom, looking to the future when they may be less mobile, and it’s really important to them to be close to shops and medical facilities.
So it’s important for developers to really get to know their target and design specifically for those people, as well as identifying gaps in the market and filling those gaps with good quality housing stock.
So What Can We Do About Preventing Oversupply?
Essentially, nothing. But that’s actually not bad news. Luckily, the market is generally self-correcting, and so we have to conclude that this is not the disaster the media would have you believe. Developers don’t just throw apartments up left, right, and centre with no regard for the consequences. If it’s not going to sell, they simply won’t build it. So this makes oversupply an unlikely prospect.
Our assessment: Canberra’s about as oversupplied as the Stark army (ie. not at all).