Saturday, May 9, 2009

Too Many Small Apartments?

"One of the other more interesting aspects that is starting to emerge in the market is the trend to smaller lot sizes and smaller houses, tiny apartments and an obsession with price points. In the short term this is a natural market reaction to tighter credit conditions, rising unemployment and a realisation that it is no longer a matter of “build it and they will come”. However, the net result of this market reaction and redesigning of projects not yet ready for the market is that in three years time, there will be a chronic shortage of good quality, larger apartments. This will apply to some extent to land subdivisions, however there is considerably more flexibility in being able to redesign land. The same cannot be said for apartments. So from this perspective, in late 2010 or early 2011 when Australia should be gathering momentum in the world again, there will be a shortage of premium, well located apartment product that is available to the market."

"Property values will fall in certain circumstances, but they only fall if you have to sell. Property is also not really a readily tradable commodity like shares, particularly when credit has become moredifficult to source. However the expectation surrounding residential property was that it continued to be easily bought and sold and as a result was highly liquid...wrong."

Source: NPR May 09 Newsletter

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