Leading Sydney project marketing firm Laver says the challenges faced by the residential apartment sector are unprecedented, and contributing to an already depleted pipeline.
According to Laver co-founder Dennis Vertzayias, following the global pandemic the industry has been faced with a perfect-storm scenario and substantial shift in the R2 construction sector that post Covid has struggled with an acute labour shortage, material cost increases and supply chain delays.
With the number of active builders in Multi-Res reduced, we have seen circa 30 per cent increases in construction costs.
Approvals are also taking longer. Approvals that used to take six months are now taking 12-18 months.
The viability of many projects are just not stacking up, so we have been in a freeze-frame scenario with new apartment projects delayed or shelved. But this will change, according to Laver.
Laver co-founder James Lampropoulos said that developers need to add 20-30 per cent to their initial feasibility to make some projects viable.
In some areas of Sydney, the market is already accepting higher prices and in other, more price-sensitive, areas it will take more time but eventually will have no option but to absorb increased prices.
Everything in a post-Covid world costs more, and new apartments are no different, Vertzayias said.
A key market indicator to determine a medium to long-term outlook on the market is the volume of enquiry over the same period and, more importantly, the quality of this enquiry.
What has been very encouraging is that despite some buyers taking more time to transact or even holding off on their decision, the appetite and interest for quality apartments in key locations has not waned, enquiry levels have remained strong, in fact, apartments more than ever are no longer just an affordable option but a preferred lifestyle choice.
As interest rates move downward, more of these buyers will transact.
With this increase in demand and an acute supply shortage, undoubtedly, the market will pay higher prices for new apartments because simply there is no other choice.
With this, we expect a renewed confidence from developers, and new
project commencements to improve quickly.
This year, Laver celebrated its fifth anniversary, with the company also exceeding $1 billion in new apartment sales.
Despite the challenges of the past five years, we’ve ‘Sold Out’ 25 projects, selling more than 1000 apartments across Sydney.
This is a milestone we are very proud about but we are equally excited about the future, Vertzayias said.
Laver project director Sam Elbanna, a 30-year veteran of the industry, said he was confident that the market would improve in 2025 with interest rates forecast to come down.
With an already acute supply shortage this will translate to more sales and higher prices for brand new apartments.
Laver is marketing about 400 apartments in various projects across Sydney and in early 2025 Laver is earmarked to launch a luxury apartment building in Sydney’s CBD, along with new apartment launches at Bondi, Concord, and Miranda.
Hero image: The Halston – 172 Apartments in North Strathfield, due for completion in 2025. Laver have already sold 60% off the plan.
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