Construction activity saw a rebound in the value of new residential development applications captured over February. The combined value of development proposals for February was $12.6 billion; almost half of which was residential. Residential application values over February totalled $6.1 billion, which represents a 64% month on month increase.
For new residential projects captured by CoreLogic, New South Wales saw a $3.5 billion application, entailing works for the Wilton North Precinct. The project encompasses the construction of 5,500 homes, with 5,000 square metres of retail, as well as playing fields, open space, local centres and schools. The project is being led by Bradcorp Holdings Pty Ltd.
CoreLogic commercial research analyst Eliza Owen observed that “the high value, large scale residential development applications are surprising, given our indices data is indicating a decline in Sydney dwelling values over the year”. She said, “Clearly, the Western Sydney City Deal and the vision from the Greater Sydney Commission has developers anticipating long term growth in Sydney’s housing market.”
The Wilton North Precinct proposal is within the Wollondilly Shire Council, which in turn is in ‘The Western Parkland City’, as outlined by the Greater Sydney Commission. On Sunday the 4th of March, Prime Minister Malcom Turnbull launched the Western Sydney City Deal with council leaders, and NSW state premier Gladys Berejiklian.
City Deals are an initiative for all levels of government, the private sector and the community to work together, to create large scale construction projects and economic reform.
Among the various employment initiatives outlined for Western Sydney in the City Deals agreement, a ‘North-South’ rail link was announced, which would link south-west Sydney with St Marys station, via the future Badgery’s Creek Airport. The project currently has an approximate construction value estimate of $20 billion.
The application for over 5,000 new dwellings in Sydney coincides with the first annual decline in the Sydney CoreLogic Hedonic Home Value Index since August 2012. In the 12 months to February, the index declined 0.5%, indicating values across the city are starting to fall. However, the plans being laid out for Greater Sydney may be prompting counter-cyclical behaviour among developers, who are betting on long-term growth in the metropolitan area.
CoreLogic commercial research analyst Eliza Owen said, “Despite the bullish residential development applications in Sydney, the combined construction value of all new projects captured over February is below the 5 year average of $13.6 billion per month, and was also substantially lower than the $18 billion recorded in January.”
While development applications were slightly subdued in February, CoreLogic captured 713 projects moving into the construction stages over the month. This is lower than the 5 year average of 1,022 projects per month, but is 11.4% higher than the number that moved into construction in the previous month. The construction value of projects that commenced over February increased 20.2% on the previous month, to $5.1 billion.