Apartment Market

EXPERT OPINION

Multiple factors are driving our real estate markets but it can all be distilled down to this: we have shortages of everything.

Why are prices rising? Because there&rsquo;s a shortage of listings, relative to buyer demand.

Why are rents rising? Because there&rsquo;s a chronic shortage of rental properties.

Why are building costs rising? Because there&rsquo;s a shortage of everything and everybody involved in the creation of new dwellings.

Who&rsquo;s responsible for these situations? The politicians and bureaucrats who love to tinker at the edges of our property markets but never think beyond the press conference.

These shortages and their consequences create serious issues for Australians and they warrant urgent action. But there&rsquo;s no evidence that the politicians are even aware there&rsquo;s a problem.

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They&rsquo;re all obsessed with the pandemic and haven&rsquo;t noticed the multitude of tenants who can&rsquo;t find a rental property at any price or the prospective owners of a newly-built home who can&rsquo;t proceed because they can&rsquo;t find an available builder - or the one they have can&rsquo;t get the materials they need.

We have a serious undersupply of rental properties because investors have been discouraged by a series of decisions and policies by politicians and bureaucrats over the past five years.

Investors have been largely sitting on the sidelines and right now there are more investors selling than buying.

The shortage of rental properties is dire. Most postcodes across Australia now have vacancy rates below 1% and many are closer to zero than 1%.

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Anyone who makes a rental property available and stages an open house will have queues of applicants and people offering more than the asking rental.

That&rsquo;s why rents are rising. Those who react to the symptoms rather than the causes are calling for controls on rents, but that will make the problem worse, by further deterring investors who are an essential part of this equation.

Placing a cap of rentals is no help to desperate individuals and families who can&rsquo;t find a rental property at any price.

When it comes to building new homes, in desirable locations, there are crippling shortages of everything that forms part of the process. The first issue is getting your foot on a block of land. In many places, everything has been sold and it takes time for developers to create new supply of land that&rsquo;s ready to be sold.

If you do have a block of land with your name on it, the next issue is trying to find a builder who&rsquo;s not booked out for the next year or more.

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If you have a builder, it&rsquo;s highly likely they can&rsquo;t do the job any time soon because they can&rsquo;t get steel or timber or bricks. Supply chains have been disrupted by the heavy demand and by the pandemic.

This means the cost of building your home is rising by the week. A lot.

If you&#39;re fortunate enough to have a fixed price contract locked in, your builder has a massive problem because they may be forced to build the home at a significant loss because their costs are going through the roof, pun intended.

Having the cost and completion date locked into a contract is worth little if your builder goes broke in mid-project.

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Who caused this shemozzle? The idiot politicians who patted themselves on the back for bringing in the HomeBuilder handout, but didn&#39;t bother to consider the impact that would have on supply chains.

This has become a big problem for everyone in the market &ndash; consumers, builders, suppliers, selling agents, buyers&rsquo; agents, everyone.

It&rsquo;s all part of a dynamic mix of factors that is forcing up the price of real estate almost everywhere in Australia.

Multiple factors are driving our real estate markets, but it can all be distilled down to this: we have shortages of everything



terryryder

Shortages of listings, rentals and approvals driving the property market: Hotspotting's Terry Ryder

<h2>EXPERT INSIGHT</h2>

The exponential growth in prices in the past quarter isn&rsquo;t confined to the housing market &ndash; many apartment markets are also experiencing major uplift.

In putting together the upcoming Winter edition of The Price Predictor Index, I have been updating the median price data for every notable suburb and town in Australia, changing the figures from three months ago to the current data.

In so many cases, the uplift has been quite startling, indicative of the once-in-20-years property boom sweeping the nation. When median prices are showing double-digit increases in just three months, you know something exceptional is afoot.

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A few weeks ago, I listed some examples of rises for median house prices in locations across the nation. But it&rsquo;s also occurring in many apartment markets &ndash; not as prevalent, but nevertheless noteworthy in individual instances.

On the Redcliffe Peninsula in buoyant Brisbane, several suburbs are recording big rises in median prices for apartments. The median price in Scarborough has increased from $480,000 to $510,000, while Redcliffe has jumped from $385,000 to $425,000 &ndash; a rise of 10.5% in three months.

The median unit price in the Brisbane northside suburb of Newmarket has risen 16% in the past quarter, from $400,000 to $465,000.

In Perth, examples of big increases in median unit prices in three months include Rockingham ($210,000 to $250,000), Maylands ($285,000 to $315,000), Dianella ($270,000 to $330,000), Fremantle ($475,000 to $510,000) and Joondanna ($310,000 to $385,000).

The Rockingham rise was 19%, Dianella jumped 22% and Joondanna&rsquo;s increase was 24%. But the biggest leap has been in Mosman Park, up from $285,000 to $385,000 &ndash; an increase of $100,000 or 35% in the past quarter.

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What, you may wonder, is going on here?

Adelaide has some notable examples. Norwood is up from $505,000 to $570,000 (13%) and Prospect has risen from $380,000 to $445,000 (17%). So does Canberra, including the 12% rise from $595,000 to $665,000 in Barton.

In Sydney, the median unit price in Fairlight has leapt from $1,425,000 to $1,560,000, Freshwater has gone from $890,000 to $940,000, Double Bay is up from $1,450,000 to $1,510,000, Neutral Bay from $955,000 to $1,050,000, St Ives from $1,020,000 to $1,120,000, and Kogarah from $685,000 to $785,000 (up $100,000 or 15%). Rose Bay has delivered one of the most remarkable results: its median apartment price has increased from $1,475,000 to $1,600,000 in three months &ndash; a rise of $125,000.

Melbourne has many notable instances, including Berwick (from $530,000 to $595,000), Beaumaris ($935,000 to $1,100,000) and Albion ($375,000 to $435,000).

There are lots of examples also in regional Australia, notably on the Gold Coast, the Sunshine Coast and the Central Coast, but also in regional cities like Newcastle.

One school of thought suggests we may see more big increases in apartment prices, because buyers priced out of the housing market in their favoured locations are switching their attention to more affordable apartments.

The exponential growth in prices in the past quarter isn’t confined to the housing market – many apartment markets are also experiencing major uplift

Many apartment markets are seeing major price increases: Hotspotting's Terry Ryder

Melbourne apartment values soared past the $600,000 median over May after&nbsp;0.8 per cent value growth, the monthly Hedonic Home Value Index&nbsp;from property data firm CoreLogic found.

The continued growth follows one per cent gains over April and 2.1 per cent in March.

The solid May performance takes the quarterly apartment gains across the Victorian capital to 3.6 per cent and the median apartment price to $605,000, well up from the $577,000 median at the start of 2021.

Apartment values in the Victorian capital have been rising since October, according to CoreLogic&#39;s data.

<a href="https://www.urban.com.au/developments/melbourne-vic?source_news_article_id=102257&amp;ref=news_body_link"><img alt="" height="800" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/template_photoshop_melbournecbd_3.jpg" width="1200" /></a>

CoreLogic&#39;s Head of Residential Research Tim Lawless reaffirmed the fundamentals driving strength in the housing market remain in place.

&ldquo;The combination of improving economic conditions and low interest rates is continuing to support consumer confidence which, in turn has created persistently strong demand for housing.

&quot;At the same time, advertised supply remains well below average.

&quot;This imbalance between demand and supply is continuing to create urgency amongst buyers, contributing to the upwards pressure on housing prices.&quot;

Melbourne is the only capital where total listing numbers are now higher than the five-year average.&nbsp; Unit listings were up over 29 per cent over the past year.

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Despite the increase in newly advertised residential properties across the country, sales activity has also increased. CoreLogic estimates sales activity over the three months to May was tracking about 37% higher than the five-year average.

&ldquo;The sales to new listings ratio remains around 1.1, meaning for every new listing there is more than one sale occurring,&rdquo; Lawless said,

&ldquo;This rapid rate of absorption is keeping advertised inventory levels extremely low, despite the rise in new listings. As a consequence, vendors remain in a strong selling position while buyers have a weak 
position at the negotiation table.&rdquo;

CoreLogic's Head of Residential Research Tim Lawless reaffirmed the fundamentals driving strength in the housing market remain in place

Joel Robinson

June 2021: How did Melbourne apartment values perform over May?

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CoreLogic research director Tim Lawless said 70 per cent of the best-performing apartment markets are located in lifestyle markets.

CoreLogic found 14 suburbs had seen 20 per cent growth in the past year.

Lennox Head on NSW's north coast topped the list with a 27.6 per cent increase in values.

The next biggest growth in values was in Victoria's Ocean Grove and Torquay, with 26.3 per cent and 25.8 per cent gains respectively.

Gold Coast suburbs Palm Beach, Bilinga, Currumbin and Tugun saw an average growth of 22.8 per cent. 

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There was also strong demand in Brisbane's bayside suburbs Cleveland and Wynnum where apartment values up by 25.1 per cent and 18.6 per cent respectively.

Apartment values in Sydney's northern beaches suburb Avalon rose by 12.9 per cent.

Lawless noted the best-performing apartment markets were located in "lifestyle" markets, including tree change locations such as Bowral and Jindabyne.

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"The common theme for the strength in the unit market is the lifestyle factor, with additional demand from buyers looking for a sea change or tree change, as well as a lift in buyers seeking out holiday homes," he told The Australian Financial Review.

"Units obviously are still underperforming compared to houses but we are seeing some growth returning to the sector.

"I think because we've seen such strong price increases in detached housing, affordability constraints have become more challenging, so it's natural to look towards higher density options."

 
 
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CoreLogic research director Tim Lawless said 70 per cent of the best-performing apartment markets are located in lifestyle markets

jchancellor

Lifestyle apartment markets lead recovery: Tim Lawless

The Newcastle developer GWH has seen a spike in sales of their Newcastle CBD development Sky Residences since the start of 2021.

GWH sales and marketing manager&nbsp;Matthew Waddell puts it down to an increase in investor activity in the region, which posted 3.6 per cent dwelling price growth&nbsp;in March, second only to Sydney in price growth of major regions across the country.

"For this current quarter (January to March), we have seen more sales than any period during the marketing of the project", Waddell says.

There's been a dramatic increase in enquiry from investors, more specifically from investors outside Newcastle, Waddell notes.&nbsp;

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Investors have accounted for 36 per cent of sales since the turn of the year at Sky Residences, just behind owner-occupiers who accounted for 38 per cent. And now over a third of those buying are coming from outside of Newcastle.

"Buyers are making their purchasing decision quicker as well, with a previous ratio of appointments to sales of 7:1 now shortening to 3:1", Waddell says.

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Set in the heart of the CBD's Civic precinct, Sky Residences,&nbsp;designed by DBI, homes 180 apartments, made up of one, two, three and four bedroom units.

There are 1,100 sqm of premium hotel-style amenities for residents, including a heated outdoor lap pool, gym and fitness centre and a rooftop sky lounge with 360-degree views across Newcastle. On the roof there's indoor and outdoor facilities, a landscaped lawn terrace, barbecues and dining spaces.

<a href="https://www.urban.com.au/new-apartments/sky-residences-509-hunter-street-newcastle"><img alt="" data-entity-type="" data-entity-uuid="" height="894" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/sky_residence_3.jpg" width="1200" /></a>

Inside there's a lounge area with a fireplace and a cinema screen and bar.

Remaining one bedroom apartments start from $485,000, with the highest remaining three bedders on level 16 for sale at $1.6 million. The north-east facing penthouse sold for $3.3 million.

<h2>About the developer</h2>

GWH have been developing property in the Newcastle region&nbsp;for over 25 years, with over $1 billion of completed projects&nbsp;delivered.

Led by Jonathan Craig, GWH are behind Aero in Newcastle, which won the Master Builders Association award for&nbsp;Apartment Development of the Year in 2018, Highpoint in Charlestown and 121Elder in Lambton.

There's been a dramatic increase in enquiry from investors, more specifically from investors outside Newcastle.



Sales spike hits Newcastle's Sky Residences as investors return

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<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
The price gap between houses and apartments in many Australian cities is closing as property investors exhibit a significant degree of herding behaviour, according to new research.
The research comes amid speculation that Australia is in a housing bubble. Herding behaviour is leading to excessive borrowing, further fuelling apartment prices, particularly in Sydney.
A major cause of the sub-prime crisis in the US was a herd mentality, in which home buyers were influenced by purchasing behaviour of others. More recently a widely publicised 2015 report by global fund manager PIMCO suggested that low interest rates and rising house prices in Australia were driving similar behaviour.
We examined whether there was formal evidence of a herd mentality in Australian metropolitan property markets. To do so, we looked at the dynamic interaction between house prices and apartment prices in Australian capital cities using monthly CoreLogic RP Data from December 1995 to June 2015.
<h4><a href="/images/2016/05/12/image-20160416-26305-8y7601.png" target="_blank">Click to enlarge</a></h4>
<img src="/images/2016/05/12/image-20160416-26305-8y7601.png" alt="">
<h4>
Figure 1. Monthly house and Apartment prices (December 1995- June 2015) Note: Green dotted lines show the narrowing of the pairs over time. CoreLogic RP Data
</h4>
Figure 1 shows house and apartment prices exhibit a strong degree of co-movement and both prices tend to deviate from each other quite often. Nevertheless, every now and then the price gap has narrowed.
Except for Canberra, in all cities the narrowing takes place after a long period of widening. There are at least two reasons why there is a long-run relationship between house and apartment prices. First, houses and apartments are considered as substitutable investments. Second, negative gearing and capital gains provisions encourage people to borrow against the equity in their home to purchase an investment property, which is typically an apartment. When the price of the family home increases, this boosts demand for apartments, pushing up their price as well.
We found that in some cities such as Sydney, investors can equally profit by purchasing apartments because rising house prices eventually push up apartment prices and vice versa.
We found house prices significantly affect apartment prices across all cities. But in only four cities (Adelaide, Melbourne, Perth and Sydney) apartment and house prices influenced each other equally. However, when apartment prices are on the rise (i.e. the market is bullish), the positive impact of house prices on apartment prices is substantially larger. This implies that investors exhibit a significant degree of herding behaviour. Such evidence of herd mentality is highest in Sydney and lowest in Darwin.
Our finding for Sydney is consistent with a widely accepted view by RBA officials who argue that prices have grown too fast and there is a housing bubble threatening to burst. Vernon Smith, who won the 2002 Nobel Prize in Economics and visited Australia in July 2015, also recently said Sydney house prices are in a bubble.
There are various ways in which this herd mentality might be reined in, including adjusting interest rates, tightening lending criteria, changing negative gearing and reforms to self-managed superannuation. Some of these initiatives have already been introduced.
In order to address a similar problem, in February 2014 Canada decided to ban rich foreign nationals from purchasing property and, as a result, some turned to Australia as their next favourite destination.
Although Australia has partially recognised this issue by prohibiting the purchase of established properties by foreign investors, there still remains several loopholes that go undetected, making housing extremely unaffordable for young Australians. This has increased intergenerational inequality between millennials and baby boomers that policy makers must be brave enough to make hard decisions about based on evidence rather than election outcomes.
Abbas Valadkhani is professor of economics, Swinburne University of Technology and can be contacted <a href="https://theconversation.com/profiles/abbas-valadkhani-177513" target="_blank">here</a>.
Russell Smyth is professor, Department of Economics, Monash Business School, Monash University and can be contacted <a href="https://theconversation.com/profiles/russell-smyth-144621" target="_blank">here</a>.
Both are authors for The Conversation. 
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jchancellor-FAypfDUnLy

The herd driven housing bubble that could trigger an apartment bust

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GUEST OBSERVER
The lumpy result in monthly building approvals data continues, with total dwelling approvals up by 10.9 per cent in the month of June 2017.
However the longer term trend shows sustained weakness with total approvals down by 2.3 percent over the year to June, particularly for apartments.
Given the boom in apartment construction in the past couple of years it is to be expected that the fall in approvals is predominantly coming from this segment of the market.
Approvals for apartments and town houses fell by 6.6 per cent over the year-to June 2017, while approvals for detached housing actually increased by 1.4 per cent.
A result in line with Master Builders forecast outlook for a fall in apartment commencements over the next four years.
But there remains a housing shortage in Australia of around 100,000 dwellings and it would be concerning if the current weakness in approvals turns into low housing commencements leading to supply constraints that can push up house prices.
We can’t lose sight of the fact that increased population growth and other factors of underlying demand mean we need to build at least 180,000 new homes each year for the next five years.
Matthew Pollock is Master Builders Australia’s National Manager for Economics and Housing and can be contacted <a href="https://www.masterbuilders.com.au/Home" target="_blank">here</a>.
 
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Approvals show apartments are taking the brunt of the fall

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GUEST OBSERVER
There’s been a lot of talk about apartment living of late.
Whether it’s millennials who can’t afford to buy a house, downsizers making a lifestyle change, owner-occupiers struggling to get defective buildings fixed, or foreign investors buying into new development, there’s no shortage of opinions and interest. 
Except for one group: lower-income and vulnerable residents.
In Greater Sydney, the latest census data show that almost one in five households (17%) living in apartments and townhouses have weekly household incomes of less than A$649. 
Among this group the largest sub-group (36%) live in private rental housing. That’s more than 72,000 households living on $649 or less per week in a housing market where average weekly rents for apartments are $550. 
Our research for Shelter NSW identifies multiple challenges such households face. 
<h2>Why does this matter?</h2>
It matters because some things about apartment and townhouse living are fundamentally different to living in a house. These differences have particular impacts on lower-income and vulnerable people living in higher-density housing.
The significant differences include:
<ul>
<li>
You live closer to your neighbours, so it’s more likely you’ll see, hear or meet them.
</li>
<li>
You share services and spaces with neighbours, from gardens to laundries to lifts.
</li>
<li>
You have to co-operate with other residents and owners to manage and pay for building operation and upkeep. 
</li>
</ul>
If you live in a private apartment building then the fact that a large proportion of apartments are sold to investors and rented out will likely have three key impacts on you:
<ul>
<li>Developers often cater for investors when designing new apartment buildings, so you will likely find a limited variation in apartment designs and sizes available.</li>
<li>Resident turnover in your building may be high, as private renters move more frequently.</li>
<li>Tensions between owner-occupiers and investor-owners may result in disagreements and disputes over budgeting and maintenance.</li>
</ul>
While these unique aspects of higher-density living can be tricky for anyone, they present particular challenges for lower-income and vulnerable residents. They tend to have less choice about their living arrangements, so they can’t up and move to better-designed, constructed and managed properties if things aren’t working out.
<h2>Building flaws affects some residents in particular</h2>
Poor building quality is one of the major issues in high-density development in Australia. The problems relate to design, defects and maintenance. 
The design issues include noise disturbances as a result of poor design, inadequate solar access and cross ventilation, the availability and flexibility of shared spaces, and safety and security considerations. 
Another issue is design that fails to help meet the needs of particular groups (such as people with a disability, and families with children). 
Beyond design, the construction quality of higher-density developments is a major issue in Australia. Key concerns include the quantity and severity of building defects, as well as the difficulties owners face having defects fixed.
Among the problems are quality of workmanship, management of construction, private certification, limited warranties and the often-prohibitive cost of legal action. 
As with poor design, lower-income households are particularly susceptible to construction issues. This is because there are more incentives to cut corners when constructing more affordable housing. Examples include rushing jobs, hiring cheaper but less experienced tradespeople, or using substandard materials. 
Once residents move in, negotiating to fix defects is particularly difficult for private renters, as they typically must go through the real estate agent or landlord. This means renters may be stuck with unsatisfactory living conditions. 
Lower-income renters are also likely to be over-represented in poorly maintained buildings, as these are usually cheaper to rent. Compared to a detached house, maintenance in higher-density properties is complicated by the complexity of the buildings themselves and the governance structures. 
As a result, required maintenance work is often not carried out, or is reactive rather than proactive. This is especially true in buildings occupied by lower-income renters with no direct recourse to the strata committee. They often cannot afford to move and may fear retaliatory rent increases if they report maintenance issues.
 
<h2>Social relations can be challenging</h2>
Neighbour disputes happen everywhere, but evidence suggests disputes are more common in areas with more lower-income and vulnerable residents and with more apartments. 
Common causes of neighbour conflict in higher-density housing reflect different expectations about noise levels, parking practices, or spending on maintenance and improvements. 
Neighbour disputes can have significant impacts on health. This potentially counteracts the health benefits associated with the walkable nature of many higher-density neighbourhoods.
When disputes arise, the number of stakeholders involved complicates efforts to find a resolution. They might include renters, resident owners, investor owners, building managers, strata managers and strata committee members. 
Research with strata residents in New South Wales shows residents find formal dispute resolution mechanisms complex and slow. Most disputes are resolved informally. 
Lower-income residents, and renters in particular, are likely to have less influence over the outcomes of such processes.
Fostering positive neighbour relations can be more difficult where resident turnover is high, such as in buildings dominated by private renters. It is also more difficult in poorly designed buildings without quality shared spaces.
<h2>New norm promotes inequity</h2>
Apartment living is the new norm in Australia. As the nursery rhyme says, when it’s good it’s very, very good, but when it’s bad it’s horrid. If these homes are poorly designed, poorly built, poorly maintained or poorly managed, they are poor places to live.
The market-led housing model that underpins Australia’s compact city policies has meant that people with less money get a poorer product. Few planners or politicians have adequately acknowledged these inequities. 
The reasons why we got here will be considered in tomorrow’s piece in this series.
<a href="https://theconversation.com/profiles/hazel-easthope-175163" target="_blank">Hazel Easthope</a> is Senior Research Fellow, City Futures Research Centre, UNSW.
<a href="https://theconversation.com/profiles/laura-crommelin-15376" target="_blank">Laura Crommelin</a> is Research Associate, City Futures Research Centre, UNSW.
<a href="https://theconversation.com/profiles/laurence-troy-2403" target="_blank">Laurence Troy</a> is Research Fellow, City Futures Research Centre, UNSW.
All are authors for The Conversation.
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This is why apartment living is different for the poor

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GUEST OBSERVER
To downsize or to not downsize?
That is the question many older Australians are asking themselves as they weigh up the benefits and disadvantages of each option. 
While downsizing offers more convenience, one major compromise is potentially moving away from friends in your neighbourhood whom you’ve known for years.
As of July next year, older Australians who are thinking of downsizing their family home into a smaller property may have a financial incentive to do so. They will now be able to invest up to $300,000 of the money made from the sale into their superannuation without being taxed. *Please seek independent professional advice when contemplating using this method.
A few years ago, Secret Agent published a ‘How To Downsize’ guide. In this report we will revisit the topic, this time focusing on the inner city suburbs and considerations that need to be made if you are looking to downsize into any of these areas.
CHANGES YOU’LL NEED TO ADAPT TO
As the term implies, downsizing means that getting used to a smaller space is an inevitable part of the equation. By moving into the inner city, you will also have to get used to new neighbours, new traffic patterns, new noises, more lights and new distances from old friends. Two of the greatest challenges downsizers will face is negotiating life in a smaller home, and detaching themselves emotionally from the place they are leaving.
Size
It’s not easy to find a home with enough space so you don’t feel cramped, yet small enough to qualify the move as a ‘downsize’. Going from an expansive four bedroom home to a two bedroom apartment that is barely the size of your old living room is not a good idea, and neither is moving into a double-storey terrace with a backyard. 
This includes an increase in three bedroom apartments on offer as well as whole-level apartments occupying the entire floor, giving residents greater privacy, space and a better outlook. Nowadays more developers are shifting towards targeting downsizers instead of investors, allowing older Australians to continually benefit from this trend over the next few years.
Emotional attachments
Many will find that the hardest part about downsizing is leaving behind the emotional connections made to the family home. Full of memories of special milestones, it can be very difficult to let go of not just the house itself but the neighbourhood too.
On the bright side, you can downsize into another area you feel somewhat at home in, such as a place you have fond memories of as a child or young adult. You may have stayed in university housing in Parkville, or worked during your early days in Richmond. It helps to have some history in the area in terms of replacing one emotional connection with another, however it doesn’t mean that there won’t be huge changes to get used to. As the inner city has transformed dramatically over the past decade and continues to do so, these areas may not be as you remembered them.
INNER CITY SUBURB GUIDE
There are many benefits of moving into the inner city that will help offset some of the more difficult transitions you need to make when downsizing. Secret Agent has put together a guide of the inner city suburbs to assist you in choosing a place that will suit your lifestyle needs.
Fitzroy North
Good access to parks and gardens, Scotchmer St / St Georges Rd amenities, plenty of smaller terraces, family-oriented neighbourhood, quiet and leafy.
Fitzroy
Brunswick St, Johnston St and Gertrude St amenities, close to Carlton Gardens, public transport easily accessible, variety of terraces, low-rise apartments and warehouses to choose from.
Carlton
Close proximity to the CBD and good access to parks, plenty of amenities on Lygon St and Swanston St, walk to Queen Victoria Market, multitude of public transport options. Only 
downside is that it gets quite noisy and busy, particularly around Melbourne University.
Carlton North &amp; Princes Hill
Rathdowne Village amenities, quiet, leafy and wide streets, family-oriented neighbourhood, mostly period terraces. Demographic includes academics and medical professionals. One drawback is the lack of train access, only accessible via tram.
East Melbourne
Exclusive blue chip neighbourhood, quiet, leafy, walking distance to Fitzroy Gardens and CBD. Variety of older style apartments, Art Deco units, Victorian terraces.
North Melbourne
Queensberry St, Errol St and Victoria St amenities, including Queen Victoria Market, walking distance to the CBD. Mostly quiet except near main roads.
Parkville
Adjacent to Princes Park and Royal Park, with period terraces, brick apartments and Art Deco units on offer. Demographic includes academics and medical professionals. Mostly quiet and leafy.
Brunswick &amp; Brunswick East
Gentrifying suburbs with large cultural and amenity hub along Sydney Road and Lygon St. Mix of older and younger population. Most apartments of varying quality located closer to main roads ie. Sydney Road and Lygon Street. Good access via train and tram. Busier and noisier near main roads.
Collingwood &amp; Abbotsford
Smith St and Johnston St amenities, convenient access to Yarra River parks on the east. Accessible via both train and tram. Mix of warehouses, terraces and apartments. Mix of younger and older population.
Albert Park &amp; Middle Park
Established, blue chip suburbs with quiet, wide and leafy streets, family and downsizer population. Mostly well-kept period terraces with a few brick and Art Deco apartments, little to no development in these areas. Walk to the beach or Albert Park. No train access.
Port Melbourne &amp; South Melbourne
Bay St and Clarendon St amenities, walking distance to the beach or several parks. No train access. Mix of newer apartments and townhouses, and older terraces. Generally established, more hustle and bustle than Albert Park and Middle Park and a transient population. 
Richmond
Multiple public transport options across the suburb. Variety of amenities along Victoria St, Bridge Rd and Swan St. Mix of younger and older population, diverse demographic overall. Plenty of apartments, townhouses, terraces and warehouses to choose from.
South Yarra &amp; Prahran
Established, leafy suburbs with a mix of younger and older population. Plenty of amenities along Chapel St, Toorak Rd, Commercial Rd and High St however also quite busy and noisy particularly at night.
OTHER THINGS TO CONSIDER
Besides location, there are other major considerations you will need to make when deciding to downsize into the inner city:
<ul>
<li>Floor plan / layout of the home: With the right design, a small home can feel big; likewise, a big home can feel small if not designed well. Choose one that suits your daily habits at home. If you love to host dinners and have guests over often, you’d want a good kitchen with a spacious dining area. If you have a creative hobby, perhaps you’ll want to convert an extra bedroom into your own studio.</li>
<li>Less cars, less parking space: It may take some getting used to the tight street parking in suburbs such as Carlton and Fitzroy. You may also choose to give up one car (or altogether), as car sharing is popular in the inner city as is collaborative consumption of other items.</li>
<li>Noise: The inner city will always be noisier than a suburban neighbourhood. Consider proximity to trams, restaurants, main roads, and how loud they are when you are indoors with all windows shut. If you have chosen an apartment, how well the walls (and ceiling) have been insulated will also make a difference as to the extent you’ll hear your neighbours.</li>
<li>Light and darkness: A northern aspect provides desirable sunshine during the day! If your bedroom window faces a main road, the blinds or curtains may not be good enough to completely block out the light from a street lamp, which may disturb your sleep. Be careful of potential development sites which may block some of your natural light in the future.</li>
<li>Access: Think about the route from the closest grocer back to your apartment. Ideally, you don’t want to have to walk too far, and a lift may be necessary if you live higher than the first floor.</li>
<li>Storage: No matter how hard you try, a 100sqm apartment will never fit as much in as your double storey suburban mansion. Consider having less things but of a higher quality so they last longer.</li>
<li>Pets in apartments: Your pets may not be happy in an apartment if they are used to having lots of room to run around. Some apartments also have strict rules against having pets in the building.</li>
</ul>
 TRY BEFORE YOU BUY!
If you’ve set your mind on downsizing and you’re not sure how to prepare for the move, start by writing a list of ‘must-have’s that are non-negotiable when searching for a place. These will be the things that are most important to your future comfort. Don’t give in to these non-negotiables! Then write a list of things you will be willing to compromise on.
When you have found an inner city area you think you would like to move to, spend time in that suburb to get a proper feel for it before deciding to buy.
Stay in a hotel or Airbnb for 1-2 weeks to feel what it’s like to live through the weekdays, weekends, mornings and nights.
If you’re not in a rush, you may rent for a few months in that area to ensure that it meets your non-negotiables in the long term. It also gives you an opportunity to try out other property types, for example if you’ve never lived in an apartment, or warehouse conversion.
CONCLUSION
When entering a situation involving both gains and losses,
as humans we tend to focus on the latter. So when making a move into a new environment, like downsizing into the inner city, we need to minimise the impact of the negatives on our lifestyle. If noise is something that is very disruptive to you, then you’d be wise to avoid buying along a busy road, or near a shopping strip. If you don’t like being too close to your neighbours, then perhaps apartment living might not be for you.
With that said, inner city living has never been more popular. As the market continues to make it easier for older residents to settle comfortably near the city, it’s only a matter of time before downsizing becomes less of a difficult choice, and more of a natural transition. 
For more information, <a href="https://secretagent.com.au/">click here</a>.
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Melbourne inner city downsizing guide: Secret Agent

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<img src="https://counter.theconversation.edu.au/content/77867/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Australia’s capital cities are getting more and more units, that are largely concentrated and come with a hefty price tag, a new report shows. And while these areas also have lots of jobs, the high price for houses means many on low incomes won’t be able to access that employment.
Between 2006 and 2014, more than 50 percent of new units were built in the 20 percent of local government areas with the highest number of jobs. 
When compared internationally, it would seem that Australian housing supply has not been as weak as is widely believed. However, the report points to some stark differences in housing supply patterns, emerging across Australia’s capital cities. 
In Sydney, Perth and Brisbane, new housing supply has lagged slightly behind population growth. In the other capital cities, housing supply actually outpaced population growth between 2006 and 2014. 
<h2>Housing supply and house prices</h2>
The issue of housing affordability has traditionally been pitched in terms of supply failing to keep pace with growing demand, and house prices rising in response to the imbalance.
<a href="https://www.propertyobserver.com.au/images/2017/05/18/Screen%20Shot%202017-05-18%20at%208.59.22%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/18/Screen%20Shot%202017-05-18%20at%208.59.22%20AM.png" alt="">
Yet, house price inflation has surged even in metropolitan areas where housing supply exceeds population growth. The evidence suggests a complex relationship between supply, population growth and price that is shaped by both supply and demand-side factors. 
As prices and rents rise, housing costs continue to eat up larger shares of household incomes, particularly in moderate and low-income groups. 
The study shows 80 percent of new unit approvals were located in the top 20 percent of local government areas with the highest unit prices. This is while 80 percent of new house approvals were in the top 40 percent of local government areas with the highest house prices. 
There is very little new supply in areas where house prices are lower, where households on low to moderate incomes can afford to live. 
<h2>Affordable housing, cities and productivity</h2>
The lack of affordable housing in the vicinity of employment centres can pose threats to the productivity of our cities. If suburban residents are forced into longer commutes to access employment in the CBD, it can reduce productivity.
A potential consequence is that low-paid workers are deterred from seeking jobs in CBDs. This would then cause certain skills to become unavailable, and businesses to be less efficient, because they cannot quickly fill vacancies with suitable applicants. 
Our data shows new units have grown by 30 percent in areas which have the most jobs, between 2005-06 and 2013-14. In contrast to this new units have only grown by 2.5 percent in areas with less jobs. 
It would appear that unit approvals are concentrated in areas with abundant job opportunities. So productivity could improve, as congestion eases, and commute times lowered, if (and it’s a big if) these dwellings were affordable to those wishing to take advantage of these job opportunities.
New housing supply has grown at a pace that matches population growth rates, at the national level. However, there is plenty of variation across the capital cities. 
The strongest growth in the number of units has been in the territories (though this is from a low base), followed by Melbourne and Brisbane. However, the strongest growth in the number of houses has been in Perth, at around 22 percent. 
Sydney has experienced much lower growth in its number of houses, at less than 10 percent. This reflects the very different patterns of development in the two cities. 
In Perth, Brisbane and Sydney, increases in the supply of housing didn’t keep pace with population growth during, between 2006 and 2014. However, the drivers of this shortfall are varied. 
Perth’s population grew very strongly over the period that we studied. The roughly one-quarter increase in population would stretch the capacity of most housing construction sectors. 
Click to enlarge
<img src="https://www.urban.com.au/images/2017/05/18/Screen%20Shot%202017-05-18%20at%209.00.19%20AM.png" alt="">
However, even though Sydney’s population growth (at 14 percent) is below the average across all capital cities, its housing supply failed to match this growth. These outcomes highlight the different demand and supply side factors operating across states. 
We currently have a national housing policy narrative that is dominated by a consensus view that higher levels of housing supply are the solution to housing affordability problems. While increased supply will always help take steam out of pressured markets, our study suggests a more nuanced approach is needed to the supply side, while not ignoring the demand side pressures. 
It’s important that we identify those barriers to expanding affordable housing supply that have been impeded in the majority of our cities, especially for low income households.
<a href="https://theconversation.com/profiles/rachel-ong-113482" target="_blank">Rachel Ong</a> is deputy director, Bankwest Curtin Economics Centre, Curtin University.
<a href="https://theconversation.com/profiles/christopher-phelps-378137" target="_blank">Christopher Phelps</a> is research assistant, Curtin University.
<a href="https://theconversation.com/profiles/gavin-wood-113723" target="_blank">Gavin Wood</a> is professor of housing, RMIT University.
<a href="https://theconversation.com/profiles/steven-rowley-201914" target="_blank">Steven Rowley</a> is director, Australian Housing and Urban Research Institute, Curtin Research Centre, Curtin University.
All are authors for The Conversation.
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