Urbis affirms Melbourne's affinity with the middle ring

As far back as 2015, there was a discernible shift in buyer sentiment throughout Melbourne's apartment market.

Articles over the course of 2015 here, here and here from a variety of industry voices, combined with Urban.com.au's accumulation of Project Database information confirmed that an increasing number of Melbourne apartment buyers favoured middle ring suburbs over the traditional CBD, Docklands and Southbank trio.

Industry consultancy Urbis underlined this trend during 2017, quantifying the increased push of apartments into Melbourne's middle and outer ring suburbs. This went hand in hand with investor grade apartment stock ceding to owner-occupied projects.

Now Urbis’ latest Apartment Essentials report for the December quarter 2017 once again confirms the continuing trend, albeit in a softer apartment market. Urbis assert that although new apartment project launches have further stagnated, the new sales rate has increased.

Urbis formulated its findings based upon 47 off the plan projects sampled in the December 2017 quarter, amounting to 9,692 apartments, in addition to keeping tabs on the status of 177 actively selling projects around Melbourne.

Urbis research shows that an expected slowdown in the third quarter of 2017 - due to stamp duty changes - did eventuate, although sales activity increased in the fourth quarter to near equivalent levels in the corresponding 2016 period.

Of the 47 surveyed projects selected from inner and middle Melbourne, 70% of projects managed to sell 70% or more of their available stock. 

Existing stock was moved relatively easily due to the restricted release of new apartment projects across Melbourne. Urbis note that four new projects amounting to 1,828 apartments launched in inner Melbourne during the December quarter, which in terms of total apartment numbers comfortably outpaced the previous quarter.

Bedroom breakdown

Unsurprisingly two-bedroom, two-bathroom apartments were the most popular product type in the December 2017 according to Urbis, accounting for 47% of sales. Single bedroom apartments with a car park were next in line, accumulating 23% of sales in the quarter.

 Both of these product types increased from the previous quarter, with fewer two-bedroom, one-bathroom and one-bedroom, zero car park apartments transacting compared to the previous quarter.

Two-bedroom, two-bathroom apartments were the most popular product type in the Inner East, Inner South, Inner West and middle-ring precincts. However, the Inner North precinct recorded a majority of one-bedroom apartments with a car park and the Central precinct recorded the majority of sales of one-bedroom apartments without a car park.

Urban.com.au analysis

There are currently 306 apartment projects noted as being at registrations or sales within the Urban.com.au Project Database.

The trend in recent years has seen a greater number of developers gravitate to Stonnington and Boroondara above all other municipalities, where demand for quality owner-occupier stock as at its greatest. Suburbs such as Hawthorn, Kew, Malvern, Glen Iris and Toorak are all sporting a relatively high number of apartment projects available for purchase.

The overall Stonnington and Boroondara number of projects which are at sales but yet to reach construction stands at 55.

Comparatively Yarra, Moreland and Port Phillip and Moonee Valley combined have 59 apartment projects at sales.

Urbis Melbourne Apartment Essentials Q4 2017 snapshot

• Urbis assessed sales from 47 off the plan projects comprising a total dwelling stock of 9,692 apartments
• In 159 monitored selling projects in Inner Melbourne, over 16,000 apartments are in Presales (48%) and a further 35% have commenced construction.
• Urbis recorded 344 off the plan sales in the December 2017 quarter. Of these, 54% were in the Inner Melbourne area, while 46% were recorded in Melbourne’s middle ring.
• Within Inner Melbourne, 48% of sales were recorded in the Inner North Precinct, followed by the Central Precinct (21% sales), Inner East (18% of sales), Inner West (11% sales) and Inner South (2% sales).
• The weighted average sales price for the December 2017 quarter was $692,592 for the Inner Melbourne precincts and $588,114 for the middle ring.
• Two-bedroom, two-bathroom product accounted for 47% of total sales across Inner and Middle Melbourne, and 40% of total sales in Inner Melbourne (compared to 27% in the previous quarter). One-bedroom apartments across Inner and Middle Melbourne accounted for 35% of total sales, though this quarter a larger majority contained a car park.
• Four new projects amounting to 1,828 apartments launched in Inner Melbourne this quarter, compared to five new projects amounting to 1,119 units in the previous quarter.