Apartment construction could drop 50% by 2020

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The boom in apartment building looks set to end, with new research predicting a 50 per cent reduction by 2020.

Over the 2015-16 period construction started on over 100,000 apartments in Australia according to BIS Shrapnel’s Building in Australia 2016-2031 report.

That number has been predicted to drop to around 54,000 by 2019-20.

BIS Shrapnel’s Kim Hawtrey told The Age the reduction would bring apartment construction down to more sustainable levels.

“After recording strong growth during the past four years, we estimate that total dwelling starts reached an improbable 220,100 in 2015-16, an all-time high,” he said.

“From this level, national activity is forecast to begin trending down over the following three years, with the high-flying apartments sector leading the way down.”

Mr Hawtrey said less apartment construction would help ease fears of an oversupply in capital cities like Melbourne.

Domain Group chief economist Andrew Wilson said the decline was to be expected.

“In Melbourne we will see lower numbers of apartments in the CBD, but increased pressure for medium and high density development on the inner suburban fringe,” he told The Age.

The falling construction predictions, weak economic conditions in the USA and weak inflation at home are all putting pressure on the RBA to cut interest rates again this week.


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