Melbourne apartment market softens despite economic conditions: JLL

Despite positive economic conditions and population growth, the Inner Melbourne apartment marker continued to soften in the first quarter of 2019, JLL have said.

The firm’s Australia Residential Research - April 2019 said that despite a cooling housing market, favourable economic conditions in the state continue.

Victoria continues to lead the country in economic growth, the report said.

“Victoria’s strong economic fundamentals will alleviate the severity of the current downturn and provide a healthy long-term outlook for the market,” it said.

Meanwhile, demand is supported by credit conditions that have improved slightly.

But residential buyers remain apprehensive, JLL said.  

“The continued absence of investors means that price growth is unlikely to return to its previous peak for an extended period.”

Apartment completions will decline in 2019 before rising in 2020 and 2021, JLL said.

Vacancy remains low, but rental growth rates diverge between precincts.

“Rents will continue to rise with vacancy remaining low,” it said.

“Going forward, limited investor stock may result in further falling vacancy which is likely to drive rental growth.”

Prices continue to fall, reflecting subdued demand while yields are likely to soften on the back of declining price.

“More projects will be deferred in 2019, as pricing continues to cool,” the report said.

“Development activity will eventually rise when the market becomes more fluid again and more buyers are able to purchase off the plan property.”