Governments making the looming 2020 Sydney and Melbourne apartment shortfall worse: Robert Gottliebsen

The building of inner city apartments in Melbourne and Sydney has slowed to a dangerous level, according to The Australian columnist, Robert Gottliebsen.

He suggests governments are making the looming unit shortfall worse.

"Not only is substantial employment and business activity at stake in both states, but in Sydney the NSW government has dreamt up an unbelievable plan that will halt apartment construction in many areas, potentially for years," he wrote.

He says apartment building has slowed dramatically because communities and councils across the city are making it as hard as possible for high density living projects to find a way through the approval processes.

"Normally such decimation of an industry is caused by demand, but in June 2019 demand is not the problem."

The supply in both cannot be generated to meet looming demand.

He noted at the moment in both cities there is excess supply but demand momentum helped by the return of Chinese to the market has already lifted Sydney apartment prices by 10% after they had fallen by 20 to 30%.

"During 2020 the demand-supply ratio will change markedly."

In both Sydney and Melbourne it takes about three years for a development to get through the approvals, while in other states the apartment approval process takes less than a year, he said.

In Sydney the current approval mess means that production of apartments is now down 40%.