Harry Triguboff: Unit Prices Will Keep Rising as Supply Further Tightens

Unit prices will keep rising on the back of surging construction costs and tightened supply, despite the recent interest rate hike, says Meriton Founder and Managing Director Harry Triguboff.

Mr Triguboff says building costs have risen over 25% year-on-year, the biggest rise in Meriton’s 60-year history. Prices of key building materials such as reinforced steel and structural timber have risen as much as 43% and 39% from December 2020 to December 2021, according to data from ABS. The extra construction costs will no doubt be added to the value of property. It may not happen instantaneously, but it will filter through.

Unit supply is also dropping at a rapid rate in Greater Sydney and unfortunately, this has been consistent for some time now, which is putting further upward pressure on prices. Astonishingly, there were only 15,417 new units completed in 2021 which represents a whopping 34% annual fall and a 52% decline compared to 2018.

Recently, Mr Triguboff has also witnessed a trend of investors selling or preparing to sell their apartments because they fear prices could fall. “If possible, selling is the last thing they should do. In my experience, sales values can only move up due to a lack of supply, higher migration intake numbers and higher building costs. Investors should now reap the benefits of an extremely tight rental market, which is driving rents higher each month. The income security an investment property can now offer is second to none”