Melbourne

The Smartline Report – September Edition

The month in review: Melbourne

By Herron Todd White
September 2015

There will be a plentiful supply of apartments in the CBD and inner suburbs in the next few years. It is estimated that there will be 160,000 established contemporary apartments in the market by 2018, a 43% increase compared to 112,000 apartments in 2015. Some of the upcoming standout developments include Far East Consortium’s West Side Place, featuring Ritz Carlton Hotel and approximately 2,600 residential apartments over four towers, which neighbours its sister Upper West Side development. In April 2015, the green light was also given to three high-rise developments delivering 1,958 apartments in Fishermans Bend.

The off the plan sales in the CBD are strongly underpinned by foreign purchasers. 95% of 941 apartments within the proposed 92-storey skyscraper known as Aurora located in the heart of the city were sold in a fortnight. Approximately 75% of the buyers are from South-East Asia and China. EQ Tower, another 63-storey skyscraper on A’Beckett Street, was sold out within eight months. The development will comprise 633 apartments on completion in June 2017.

There is a growing concern of oversupply in the market. It was recorded that 1,518 new apartments settled in the CBD over the past 12 months to May 2015 (City Scope, 2015). Demand will need to remain strong in order to match the large influx of new apartments over the short to medium term. Inner city apartments that are established or are not being sold off the plan, can generally be purchased at a lower price than a new apartment. The recent resale of new apartments evidenced that many of the new apartments, even being sold in brand new condition, are struggling to achieve their original off the plan purchase price.

Attached housing has been growing rapidly within Melbourne. South Yarra is an inner city premium suburb and has a median house price of $1,662,500 (detached housing) (REIV.COM.AU). According to experts, the high demand suburb has been rated as one of Melbourne’s most liveable suburbs with some of the most popular shopping and dining precincts.

The area has experienced a large influx of new midto high density residential and mixed use attached housing developments which have influenced the area and market previously known for single dwelling housing or low-set small density unit buildings.

The most attractive type of attached housing available within the area is the boutique residential apartment developments with high end finishes.

In relation to attached housing, the area is strongly characterised by mid to high density unit developments, therefore creating a strong demand for townhouses which are considered unique within the area and are extremely competitive at auction. The suburb itself is experiencing large population growth and the space within South Yarra is becoming limited for further developments. As seen from the results of the television show The Block, the threestorey townhouse market is strong and unique for the suburb of South Yarra driving the townhouse market up. The best opportunity for attached housing is townhouse living, but with limited supply and high competition, the smaller unique, low density developments would be the next best option.

The outer eastern suburbs are generally popular among first and second home buyers with families. There has also been a noticeable rise in market activity from foreign purchasers. Both builders and developers are active in the marketplace, with an increased focus on purchasing potential redevelopment sites. This has led to a noticeable increase in townhouse unit development in these areas. In 2015, the outer eastern suburbs are still considered to offer value for money which makes these areas attractive and affordable for first home buyers, families and investors alike.

The Yarra Ranges area and Melbourne’s south eastern area have seen a significant rise in townhouse development within the past decade. Prior to this period the area was characterised by single level detached brick veneer and weatherboard dwellings on a quarter acre block (864 square metres). Today it is a mixture of new attached housing, detached townhouse and backyard development and the conventional 1950s single level dwelling which remain highly attractive to the development market for potential subdivision opportunities. Larger vacant land allotments have also seen considerable interest from local development and investment companies operating within the area.

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Please note that information in this publication is subject to change without notice. Smartline assumes no responsibility for any errors, omissions or mistakes in this document. © Smartline Home Loans P/L 1999 – 2015. Australian Credit Licence Number 385325

 

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DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.