27 Jun Melbourne Apartment Market Erupts Past CBD Into Middle Ring
Apartment living is no longer just for Melbourne’s CBD dwellers.
In the March 2017 quarter, the majority of apartment sales (58 per cent) occurred beyond the inner-city area, according to a report by Urbis.
Melbourne Apartment Essentials recorded 267 sales throughout Melbourne’s middle ring area this quarter, and that dispersion of activity throughout Melbourne was highlighted as a trend expected to continue as more sites become ripe for apartment development in the middle ring.
Urbis Director of Property Economics and Research Mark Dawson said that this increase in activity beyond the Central Precinct makes sense as amenity and infrastructure investment feeds emerging markets and inner city sites become scarce and increasingly expensive.
“Apartment living is no longer just for CBD dwellers, and precincts like the Inner North, which captured 43% of total inner Melbourne sales, are well set up for apartment living,” he said.
“They provide residents with easy access to transport and neighbourhood character, as well as an affordable entry-point to the market.
“Moonee Ponds, Heidelberg and Footscray are all markets that we have seen emerge over the past few years,” Mr Dawson said.
This move in the market was supported by push factors including a mutually reinforcing market nudging purchasers and developers beyond their feasibility thresholds, and pull factors including the city-wide urban renewal focus.
The report said that on top of transport improvements, planning and investment gravity is growing around the National Employment and Innovation Clusters to provide jobs and services throughout the city.
Market Continues To Self-Regulate
Melbourne Apartment Essentials recorded almost 500 sales from 47 projects in the March 2017 quarter. Four new projects amounting to 1,471 units launched, compared to 14 developments at 2,878 units a year previously.
“We expect to see fewer project launches which will ensure the market maintains a healthy balance of supply and demand,” Mr Dawson said.
“Of the projects we monitor, 82% of stock has been sold. At this stage of the market it is not about a large reduction in sales or drop in price, but a change in the type of sales we are seeing and where apartments are selling.
“After a more subdued quarter in inner Melbourne, we maintain our expectation of a boost in activity prior to the 1 July stamp duty changes,” he said.
Two-Bed, Two-Bath A Firm Favourite
Despite fewer sales in inner Melbourne, the weighted average sale price increased to $706,391, a $44,476 increase compared to the December 2016 quarter. This increase was driven by the volume of two-bedroom product selling.
Two-bedroom, two-bathroom product is still a firm favourite, recording 35% of total sales across the market, an increase from 29% in the previous quarter. Mr Dawson said this result was in line with current market trends, as purchasers look to high rise living as a place to call home and not just a place to live or invest.
Urbis Melbourne Apartment Essentials Q1 2017 Snapshot
The Melbourne Apartment Essentials Report found:
- Urbis recorded just under 500 off the plan sales in the March 2017 quarter. Of these, 42% were in the Inner Melbourne area, while 58% were recorded in Melbourne’s middle ring.
- For the first time since reporting commenced, the majority of inner Melbourne sales were outside of the Central Precinct. The Inner North recorded the most sales (85 sales), followed by the Inner East (53 sales), Central (40 sales), Inner West (17 sales) and Inner South (1 sale).
- The weighted average sales price for the March 2017 quarter was $706,391, a $44,476 increase compared to the December 2016 quarter. This increase was driven by the volume of two-bedroom product selling.
- Two-bedroom, two-bathroom product was the most popular, accounting for 35% of total sales, an increase from 29% in the previous quarter.
- One-bedroom, one-bathroom, one-car product accounted for 18% of total sales.
- Four new projects launched amounting to 1,471 units this quarter, compared to seven projects amounting to 3,741 units at the end of the June 2016 quarter. Launches have decreased as the market self-regulates, although we have been expecting to see a short term rebound to beat the stamp duty changes on 1 July.