Other dwellings - units
The dynamic for the market in attached dwellings is markedly different!
In Sydney and Melbourne it is usual for apartment projects to take more than 24 months to complete on average, largely due to brownfield site remediation challenges (the figure is much lower in Queensland, for example, at around 19 to 20 months).
With lead times for new apartments so much longer, developers are often required to ensure a certain percentage of pre-sales before project financing can be secured.
Attached dwelling commencements are likely to decline further through 2017 as developers fear that new off-the-plan purchasers are at risk of not settling, particularly those based offshore.
To date, non-settlements have reportedly remained low, and material losses to banks have not yet resulted.
In theory - at least in areas and property types that people actually want to live in! - while credit remains available markets should be self-correcting in time as dwelling commencements fall, and buyers sensing bargains populate the newly supplied markets.
The Reserve Bank took a detailed look at the apartment sector in its bi-annual Financial Stability Review, and concluded:
"Any oversupply in Australia would be more localised to certain geographic areas, and potential price falls tempered as the population moved to absorb the new (and cheaper) supply of housing in these areas over time."
Of course, central banks rarely predict catastrophes, for fear that they may become self-fulfilling. Be vigilant!