In some parts of Sydney, it's almost impossible to buy a new apartment

Everywhere you look cranes dotted across inner Sydney signal the unrelenting construction of apartment blocks, but in some pockets of the city homebuyers are struggling to get their hands on new apartments.

In Sydney’s east, it’s increasingly difficult for buyers to enter the market where suburbs are tightly held and there’s no new supply to offer reprieve for those scrambling to buy in the area. 

In Elizabeth Bay there are just four multi-unit dwellings approved but not yet completed, 34 in Paddington, 38 in Newtown and just 15 in Centennial Park.

​In Randwick council area, a spokesperson said the most popular suburbs for new developments in the 2015/16 year were Randwick, Coogee and Maroubra, with 20 new developments across these three suburbs.

That’s despite 5000 more new apartments in the pipeline in Green Square hotspots Zetland and Waterloo, 1700 more in neighbouring Rosebery and close to 3000 in the CBD, according to City of Sydney figures.

Council documents show there has been just one multi-unit block built in Centennial Park in the past 10 years.

So it’s hardly surprising that buyers are beating down the doors at display suites for those 15 units coming up at The Artisan, at 64-66 Cook Road in Centennial Park. 

“We had a VIP viewing last Thursday night,” said CPM Realty’s Sam Elbanna. “We expected 40 people and we got just over 90,” he said. With registrations of interest above 300 already ahead of the October 8 launch date, it may be a struggle to get one.

Rather than investors, he says young couples and downsizers from the eastern suburbs and lower north shore want a home in that “unbeatable location” near Sydney’s most famous park. Some apartments will have views across parkland to the city.

No surprise then that there’s not much change from $1 million for the one-bedders, which range in price from $840,000 to $970,000 for 50 to 58-square-metre apartments. The 75-square-metre two-bedders are a cool $1.25 to 1.6 million. And the 145-square-metre three-bedroom penthouses will easily sell at prices nudging $3 million.

CBRE managing director David Milton ​says well-built apartments continue to be popular. “But the buyers have more choice, so anything that’s not well-designed or too expensive, they’re not selling well,” he says.

This hasn’t been a problem at the boutique development The Hensley in Potts Point, where just six units remain of the 44 that went on sale eight weeks ago. Just as in the red-hot auction market for existing property, CBRE director Ben Stewart says there’s a shortage of quality stock in the inner east. 

About the same time that a north shore family man paid $4.29 million – $1,175,000 over reserve – after a bidding war for a house in Longueville last Saturday, he sold a three-bedroom apartment in The Hensley for $3.6 million to Paddington downsizers. 

“People are getting really good prices for houses, which is relaying over to the prestige apartments,” he says.

“There’s plenty of demand for owner-occupier stock in all of our projects.”

Talk of oversupply

It’s a very different scenario across town in Green Square where one of the largest urban renewal projects in Australia is underway. The 5000 new units coming to Waterloo and Zetland is on top of the 12,122 already there, according to the council’s 2016 Housing Audit. And there are 2542 in Rosebery, the audit shows. 

But despite predicting an oversupply by the end of next year in Melbourne’s CBD and parts of Brisbane, notoriously-pessimistic analysts Bis Shrapnel – who released their Building Industry Prospects report on Thursday – see no cause for alarm for Sydney for the next three or four years, even for the inner south.

“The volume is fairly significant in Green Square – more relative to the CBD so there may be some issues there, but not dramatic amounts of oversupply,” Bis Shrapnel’s managing director, Robert Mellor, said.

He says it depends who is going to occupy all these new apartments – whether they are going to be snapped up by investors looking for tenants, or owner occupiers.

Domain Group chief economist Andrew Wilson doesn’t see any issues either way. “Demand will soak up these record levels of supply sooner than predicted,” he says.

With front page reports this week of Sydney’s population soaring by $2.1 million over the next 20 years, people have got to live somewhere – whether they’re renting or buying. “And many younger people would prefer not to live 30km from the city, they want to live in some of these regenerated areas close to the CBD,” Dr Wilson says.