Sydney's soaring house values are driving up the demand for apartments, putting strain on supply and pushing prices higher, property mogul Harry Triguboff says.
Figures released earlier in the week by CoreLogic show that Sydney house prices rose 15.5 per cent in 2016 and jumped a further 2.7 per cent in January.
Mr Triguboff, who owns Meriton Group, says the unrelenting climb in Sydney’s house values will lead to higher apartment prices in 2017 as would-be property buyers move into that market instead, putting pressure on supply.
“Today, we are in a situation where the apartment supply this year is not, I’m afraid, likely to meet the demand and that can mean only one thing – buyer competition forcing prices higher,” Mr Triguboff said in a statement on Friday.
Nationally, house prices rose 10.7 per cent in the year to January, taking the median capital city price to $605,000, according to CoreLogic’s Hedonic Home Value Index.
Chris Johnson, chief executive at Urban Taskforce, which represents property developers, last week said the supply of new apartments was not enough to meet demand, with an estimated 37,000 needed per year and only 31,000 built in 2016.
Mr Triguboff who founded Meriton – Australia’s largest apartment builder – said under-development of growth areas would put pressure on suburban areas to accommodate the shortfall.
“Unless developers have plenty of equity and a strong book of solid pre-sales, the banks won’t bankroll them and sites will sit derelict,” he said,
Regulatory and financial restrictions were delaying and preventing projects from starting, which then pushes up prices due to higher competition for available properties, he said.
Meriton’s director of sales, James Sialepis, said that while the company expects to sell 2,000 apartments in 2017, the number would be greater if developments could obtain approvals faster.
“Buyers are transitioning into new apartments because of the quality, design and amenity provided,” he said.
“From a sales perspective, I wish we had more stock to sell.”