NSW vacancies steady
I read a lot on social media about how apparently Sydney is overbuilding, often supported by charts of building approvals figures.
There is no question that Sydney has a historically very strong pipeline of dwellings approved or under construction.
Indeed you can see this for yourself by looking at the high number of cranes on the skyline - although in inner Sydney many of these relate to commercial construction at Barangaroo and on Darling Harbour.
Sydney, Melbourne and Brisbane have accounted for more than three-quarters of apartment approvals since 2011, according to the latest Reserve Bank of Australia (RBA) research.
Of course, while building approvals can be a useful representation of the potential pipeline of new construction, more important is the number of dwellings that are actually commenced, constructed, and then completed.
The RBA's latest Bulletin explains how the process of an apartment project from site selection to completions can be several years in duration.
With Sydney's population growing at a pace of more than 80,000 per annum, to date the supply pipeline has failed to make much of a dent in rental vacancy rates.
In fact, since APRA implemented tightening measures to slow investor lending, vacancy rates in inner Sydney have declined.
Unlike in parts of Brisbane (South Bank, South Brisbane, Newstead, Fortitude Valley, and the CBD) and Melbourne (Docklands, South Bank, and the CBD) - where new apartment developments are heavily concentrated in areas close to the Central Business District - Sydney's apartment construction is spread more widely across the city.
Areas such as Parramatta to the west, Mascot to the south, and Chatswood to the north have seen a high volume of apartment development, for example.
According to the latest Real Estate Institute of New South Wales (REINSW) data vacancy rates have tightened significantly in inner Sydney from 2.1 per cent in October 2015 to just 1.3 per cent in April, before rebounding a little to 1.4 per cent in May.
The month-to-month figures can jump around a bit, naturally, so below I've smoothed them on a 3mMA basis.
As you can seen vacancy rates in the inner suburbs of Sydney have been tightening quite sharply since macro-prudential measures were introduced.
It will be interesting to see how the apartment supply pipeline impacts vacancy rates over the next year or two.
The RBA noted in its Bulletin that an intense level of competition for development sites in Sydney and Melbourne has forced land prices upwards.