By Eleanore D. Sanchez

An uneven balance between construction supply and occupancy rates will result in “significant increases in vacancy rates” over the next 12 months, said a senior economist in a recent conference. 

BIS Shrapnel managing director Robert Mellor said in a forecasting conference that despite the weak demand for property, investors remain aggressive and have sustained their construction activities.

“Basically, that's due to falling overseas migration. That's a view that we've had now for the last couple of years,” Mellor said. 

Further, he said demand is “actually weaker today than it was two years ago, and it will likely get weaker with lower population growth in the next 12 months.”  

He added that the glut in supply is expected to sustain through 2019.

“Developers always think from the point of view of sales to an investor, but I’m ultimately interested in who is occupying the dwelling, unless we’ve got a massive increase of people quite prepared to have vacant investment dwellings,” Mellor said.

Citing industry figures, he pointed out that Perth, for instance, had a 2% vacancy rate as far back as four years ago, but it has currently ballooned to 4.5%. 

“I suspect that we will see numbers vacancy rates in markets like Melbourne in the inner areas, and Brisbane inner areas, going to 4.5% and maybe even significantly above that given the magnitude of the current boom,” he concluded.  

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