Melbourne Property

<p>Melbourne&#39;s unit market has continued to hold firm despite a cooling off in the house market.</p>

<p>CoreLogic&rsquo;s national Home Value Index pegged the Melbourne-wide apartment growth at 0.4% over April, the third consecutive month growth in the unit market has outstripped growth in the house market.</p>

<p>The Melbourne unit market (which incorporates both units and townhouses), is now 0.2% since the start of 2022, after posting 0.2% growth across March and 0.1% in Feb. Values started the year poorly, going backwards -0.4% in January.</p>

<p>The median apartment value in Melbourne is now $630,671.</p>

<p>[smartcode_project:default project_id=1260 project_image_fid=177634]</p>

<p>The growth in unit values is a stark contrast to the house market, which is sliding due to the affordability factors brought to more of a head following the RBA&#39;s interest rate hike in May, and expectation of further rate hikes.</p>

<p>Houses Melbourne-wide, on average, have remained flat since the start of 2022, but that was mainly due to a strong start in January. The rolling quarterly growth is now -0.5% after a 0.2% decline across April, CoreLogic data found.&nbsp;</p>

<p>CoreLogic&rsquo;s Research Director Tim Lawless&nbsp;says the weakening state of the market has taken the rolling quarterly trend into negative territory across Melbourne for the first time since these cities were in the midst of extended lockdowns in mid-to-late 2020.</p>

<p>[smartcode_project:default project_id=2806 project_image_fid=175415]</p>

<p>Advertised inventory, at a national level, is tracking almost 30 per cent below the previous five-year average however, in weaker markets like Melbourne, advertised supply levels have normalised, with listings in Melbourne 8.2%&nbsp;higher.</p>

<p>Higher stock levels across these markets can be explained by an above average flow of new listings coming on the market in combination with a drop in buyer demand</p>

<p>&ldquo;With higher inventory levels and less competition, buyers are gradually moving back into the driver&rsquo;s seat. That means more time to deliberate on their purchase decisions and negotiate on price,&rdquo; Lawless says.</p>

<p>Rental markets are also showing multi-speed conditions, with most of the capital cities experiencing an upward trend in rental growth in 2022. Nationally, rents were up 2.7% over the three months to April, taking the annual change in national rents to 9.0%. A year ago, the annual change in national rents was 4.9 per cent. Based on the annual change, house rents (+9.1 per cent) are rising faster than unit rents (+8.7 per cent), however this trend is changing sharply as demand for unit rentals increases.</p>

<p>[smartcode_project:default project_id=253 project_image_fid=52822]</p>

<p>&ldquo;On a rolling quarterly basis, we are now seeing unit rents rising faster than house rents especially in Melbourne where rental conditions across the unit sector were previously much softer,&rdquo; Lawless says.</p>

<p>&ldquo;The shift in rental demand towards units reflects both rental affordability pressures, which are deflecting more demand towards the &lsquo;cheaper&rsquo; unit sector, and the return of overseas migrants and visitors. Rental demand from overseas arrivals tends to skew towards inner city and higher density precincts.&rdquo;</p>

<p>In Melbourne, unit rents are 3.6 per cent higher over the past three months compared with a 1.2 per cent rise in house rents. Higher yields and long-term prospects for capital growth could see investors comprising a larger portion of housing market activity.</p>

<p>[smartcode_project:default project_id=3281 project_image_fid=46048]</p>

<p>With the cash rate set to move through a rapid tightening cycle, CoreLogic expect this trend towards a gradual softening in the growth rate will become more pronounced over the coming months, before the national index starts to trend lower.</p>

<p>&ldquo;Although we are expecting the housing market to move into a downturn through the second half of the year, it is important to remember the context of the recent growth phase,&rdquo; he says.</p>


Melbourne's unit market has continued to hold firm despite a cooling off in the house market


alisonwarters@gmail.com

Melbourne apartment market insights: What happened over April

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<p>Melbourne still has strong numbers for price growth, but its up-cycle is nearing the end.</p>
<p>Sales activity, while still solid, is falling steadily and the number of growth markets is close the lowest levels since the up-market started.</p>
<p>The other clue pointing to the end of the cycle is that all the precincts that still have multiple growth suburbs are at the lower end of the market - most are outer-ring suburban areas. It’s now difficult to find inner-ring or middle-ring precincts with growth suburbs.</p>
<p>To demonstrate the steady decline in sales, a comparison of numbers in successive March Quarters shows this pattern: 33,109 (2015); 28,899 (2016) and 28,948. Sales in the June Quarters have been 38,031 (2015), 34,115 (2016) and 32,300 (2017).</p>
<p>In Hotspotting’s research for The Price Predictor Index, the total number of suburbs with growing sales activity has dropped from 96 in the Autumn report, to 60 in Winter edition and further to just 35 in the Spring survey.</p>
<p>These trends confirm a steady diminution in the strength of the market. And in terms of annual price growth, the latest data from CoreLogic has Melbourne ranked third on dwelling price growth behind Hobart and Sydney.</p>
<p>The remaining growth locations are in the cheaper areas, such as the LGAs of Brimbank and Melton (west); Hume and Whittlesea (north); Wyndham (far south-west;) and Frankston and Mornington Peninsula (far south/south-east).</p>
<p>But even these affordable markets are gradually declining in terms of the number of growth suburbs.</p>
<p>The leading precincts are Whittlesea and Wyndham LGAs. Whittlesea is consistently one of the city’s strongest markets, driven by affordability, infrastructure and jobs nodes.</p>
<p>We have identified four suburbs with growing sales momentum, down from six in the Winter survey. The suburb of Epping is one of the remaining strong markets, with sales moving from 115 to 145 to 135 to 160 to 172 in recent quarters. </p>
<p>In neighbouring Hume, growth suburbs include Broadmeadows, Roxburgh Park and Meadow Heights (where sales have lifted from 27 to 29 to 34 to 45 to 51 to 54 in the past six quarters).</p>
<p>Wyndham in the south-west is the other stand-out, led by Hoppers Crossing, Tarneit, Williams Landing and Werribee.</p>
<p>The Brimbank LGA has been one of the Melbourne’s most outstanding markets for the past 2-3 years. It still has three suburbs with rising sales momentum but a greater number of Plateau markets – further evidence of the wind-down in the market.</p>
<p>Cheaper markets in the far south/south-east, including the LGAs of Frankston, Casey and Mornington Peninsula, still have growth suburbs but, they are outnumbered by suburbs with Plateau-ing sales activity.</p>
<p>Upmarket and Middle Melbourne areas remain solid but most are dominated now by Plateau markets: they include the LGAs of Whitehorse, Moreland and Kingston. Very few growth suburbs remain.</p>
<p>There are also many suburbs where sales activity has dropped considerably, compared to 2014-2015 levels. They include Box Hill, Brighton, Brunswick East, Caulfield North, Chadstone, Clayton, Doncaster, Footscray, Glen Waverley, Hawthorn, Kew, Richmond, Rowville, South Yarra, West Melbourne and Windsor.</p>
<p class="BodyCopy">The worst performers are the inner-city unit precincts. We rank the CBD, Southbank and Docklands as Danger markets, as well as Carlton and Collingwood.</p>
<p class="BodyCopy"><span>Terry Ryder is the founder of </span><a href="https://www.hotspotting.com.au/" target="_blank">hotspotting.com.au</a><span>. You can </span><a href="mailto:%20%3Cscript%20type='text/javascript'%3E%20%3C!--%20var%20prefix%20=%20'ma'%20+%20'il'%20+%20'to';%20var%20path%20=%20'hr'%20+%20'ef'%20+%20'=';%20var%20addy38821%20=%20'ryder'%20+%20'@';%20addy38821%20=%20addy38821%20+%20'hotspotting'%20+%20'.'%20+%20'com'%20+%20'.'%20+%20'au';%20document.write('%3Ca%20'%20+%20path%20+%20'/''%20+%20prefix%20+%20':'%20+%20addy38821%20+%20'/'%3E');%20document.write(addy38821);%20document.write('%3C//a%3E');%20//--%3E/n%20%3C/script%3E%3Cscript%20type='text/javascript'" target="_blank">email him</a><span> or follow him on </span><a href="https://twitter.com/hotspotting" target="_blank">Twitter.</a></p>
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terryryder-YECXbqmri2

Melbourne CBD, Southbank and Docklands labelled danger markets

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<p class="p1"><span class="s1">Few markets across Australia are pumping as strongly as the market in the Wyndham City LGA in the south-west of Melbourne.</span></p>
<p class="p1"><span class="s1">Areas that offer affordable homes are attracting increasing attention in Melbourne and the Wyndham City area is now the most active market in the metropolitan area, with key suburbs Hoppers Crossing, Point Cook, Tarneit, Werribee and Wyndham Vale achieving a combined 3,500 house sales in the past 12 months.</span></p>
<p class="p1"><span class="s1">All of these suburbs have seen significant increases in sales volumes in the past 12-18 months and strong price growth has resulted. Most have had median price growth well above 10% in the past 12 months.</span></p>
<p class="p1"><span class="s1">Wyndham City sits in the corridor between Melbourne and Geelong, and is one of Australia’s leading population growth areas. It has good transport links to central Melbourne (helped by the $5 billion Regional Rail Line), plenty of major jobs nodes, solid infrastructure and some of the Melbourne region’s most affordable housing.</span></p>
<p class="p1"><span class="s1">It has suffered from oversupply issues in the past, thanks to over-zealous developers – but currently vacancy rates in the key suburbs are low. There is a strong need for new dwellings, with the LGA’s population rising around 10,000 per year.</span></p>
<p class="p1"><span class="s2">Given all of that, it’s no surprise that t</span><span class="s1">he City of Wyndham is a place for young families. Those aged from 20–44 represent 42% of the population, compared to the state average of 36%, while children aged 0–19 make up 31%, also higher than the state average of 24%.</span></p>
<p class="p1"><span class="s1">Wyndham City has a diverse economy, with a number of key industries, including:-<span class="Apple-converted-space"> </span></span></p>
<ul class="ul1">
<li class="li1"><span class="s1">industrial and technology precincts (including major industrial estates at Laverton North which generate $7.3 billion in annual economic activity);</span></li>
<li class="li1"><span class="s1">several large retail precincts, including Pacific Werribee, Point Cook Town Centre, the Werribee CBD (which has both retail and commercial space) and Old Geelong Road, Hoppers Crossing (a precinct of 250 homemaker stores and bulky goods retail);</span></li>
<li class="li1"><span class="s1">tourist attractions such as Werribee Park Mansion, the Open Range Zoo, the State Equestrian Centre and the Point Cook RAAF Museum; and<span class="Apple-converted-space"> </span></span></li>
<li class="li1"><span class="s1">agriculture, including vegetable growing and grazing (Werribee South has one of Victoria’s leading market garden areas).</span></li>
</ul>
<p class="p1"><span class="s1">One of the features of the municipality is the number of significant jobs nodes. These include RAAF bases at Laverton and at Point Cook, the Werribee Agriculture &amp; Food Technology Precinct, the Werribee Park Tourism Precinct and the Melbourne Water Western Treatment Plant.</span></p>
<p class="p1"><span class="s1">The Agriculture &amp; Food Technology Precinct is the largest in Australia, covering 800ha and specialising in food, food packaging and bio-technology. The LGA has 3,000ha of market gardens in the Werribee South area and is considered the broad leaf vegetable capital of Australia.<span class="Apple-converted-space"> </span></span></p>
<p class="p2"><span class="s2">Property development and construction is a major part of the economy. Dwelling approvals have risen from fewer than 1,000 a year before 1999 to consistently above 2,300 a year since 2001.</span></p>
<p class="p1"><span class="s1">Melbourne’s strong run of house price growth has rippled out to the outer-ring suburbs and now many of the growth locations are in the cheaper areas, led by the suburbs of Wyndham City.</span></p>
<p class="p1"><span class="s1">The relatively-low house prices are enticing buyers to the area. The median price for a house in Tarneit, 30km west of Melbourne’s CBD, is $470,000 – compared to Ringwood East, 30km east of the CBD, where the median is $830,000.</span></p>
<p class="p1"><span class="s1">Consequently, sales activity in Wyndham has been rising, led by Hoppers Crossing, Truganina and Werribee. Annual sales in Hoppers Crossing grew from 468 in 2014 to 630 in 2015, according to <em>realestate.com.au</em>, and have continued on a steady incline since.</span></p>
<p class="p1"><span class="s1">This has been accompanied by price growth. In SQM Research’s latest Housing Boom and Bust report, Melbourne’s south-west was identified as the nation’s best-performing region for house price growth.<span class="Apple-converted-space"> </span></span></p>
<p class="p1"><span class="s1">With 972 house sales in the last 12 months, Point Cook is one of Melbourne’s busiest markets and its median house price has grown 16% to $585,000 in the past 12 months.</span></p>
<p class="p1"><span class="s1">Elsewhere across the LGA, median house prices remain mostly in the $400,000s, despite strong growth in the past 12 months.<span class="Apple-converted-space"> </span></span></p>
<p class="p1"><span class="s1">The longer-term growth rates (average annual rises over 10 years) are 6–7% per year for most suburbs in this precinct, while yields are generally in the 3.6% to 4.3% range.</span></p>
<p class="p1"><span class="s1">All of this, together with the recent decreases in vacancy rates, makes Wyndham City a market worthy of consideration by property investors.<span class="Apple-converted-space"> </span></span></p>
<p class="p1"><span class="s1">The market is dominated by standalone houses (84%), but the mix is changing as the ratio of units-to-houses increases. Since the 2011 Census, the market share of units has increased from 10% of total dwellings to 16%, according to the 2016 Census.</span></p>
<p class="p1"><span class="s1">In suburbs like Werribee and Hoppers Crossing, units typically sell in the low $300,000s, with typical rental yields around 5%.</span></p>
<p class="p1"><span class="s2">T<em>erry Ryder is the founder of hotspotting.com.au</em></span></p>
<p class="p2"><span class="s4"><a href="https://mailto:ryder@hotspotting.com.au"><em>ryder@hotspotting.com.au</em></a></span></p>
<p class="p4"><span class="s2"><em>twitter.com/hotspotting</em></span></p>
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Wyndham City south-west of Melbourne 'pumping strongly': Hotspotting's Terry Ryder 

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<div>It seems that Melbournites are not waiting to buy land...they are opting buy land and wait.<br><br>At least for now.<br><br>Melbourne has accelerated to record monstrous population growth in recent years, while the regions of Victoria have largely flatlined ex-Geelong.<br><br>You can make your own assessment of whether high population growth is impacting the Melbourne housing market, but the land sales figures look pretty damning. </div>
<div> </div>
<div>The pressure appears to be starting to tell, as vacant land sales are being gobbled up at the fastest pace ever recorded, according to Oliver Hume's quarterly data.</div>
<div> </div>
<div><a href="https://www.propertyobserver.com.au/images/2017/08/24/A1.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/08/24/A1.jpg" alt=""></div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Model of a modern Valuer-General</span></strong></div>
<div> </div>
<div>Rising land values have been a key input into rising house prices in Melbourne.</div>
<div> </div>
<div>Median vacant land prices in metropolitan Melbourne increased by +3.7 per cent in calendar year 2016, according to the Valuer-General, rising from $219,000 to $227,000.</div>
<div> </div>
<div>Median house prices in metro Melbourne rose for a fourth consecutive calendar year from $600,000 in 2015 to $635,000 in 2016.</div>
<div> </div>
<div>Median unit values increased far more steadily over the year, up from $487,000 to $494,000.</div>
<p> </p>
<div class="separator"><a href="https://2.bp.blogspot.com/-PwOPlS6xpus/WZlT3UEHAmI/AAAAAAAAltM/NQqU2fnmXAoMP4yOetW8GAK5KgUYsa9EgCLcBGAs/s1600/A2.jpg"><img src="https://2.bp.blogspot.com/-PwOPlS6xpus/WZlT3UEHAmI/AAAAAAAAltM/NQqU2fnmXAoMP4yOetW8GAK5KgUYsa9EgCLcBGAs/s640/A2.jpg" width="640" height="382" data-original-height="831" data-original-width="1389"></a></div>
<div class="separator"> </div>
<div>The ratio of land prices to house prices on this data series hasn't changed a great deal over more than three decades, to some extent reflecting what is actually being measured, with the vacant land sales often located in fringe or secondary locations.</div>
<div> </div>
<div>Perhaps this is the subject for a longer blog post another time, but the Valuer-General report always cautions about too many generalisation being drawn from the headline numbers. </div>
<div> </div>
<div>House and land prices in regional Victoria have lagged Melbourne substantially over the past 10 years to 2016, at least in aggregate.</div>
<div> </div>
<div>Metro Melbourne median house prices have now more than doubled over the past dozen years, and have quadrupled since 1998. </div>
<div> </div>
<div>In 2016, regional house prices rose by +2.6 per cent to $320,000.</div>
<div> </div>
<div>This represents an increase of $100,000 or +45 per cent over 10 years, before accounting for stamp duty and repairs, maintenance, and other holding costs. </div>
<p> </p>
<p class="p1"><span class="s1">PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank"><span class="s2">AllenWargent</span></a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank"><span class="s2">blogger</span></a>.</span></p>
<p class="p2"><span class="s3"><em>His latest book is </em><a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank"><span class="s2"><em>Four Green Houses and a Red Hotel</em></span></a><em>.</em></span></p>
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pwargent-M4siyDbqQY

Melbourne land sales figures look pretty damning

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<p>Melbourne’s property market is tipped to ease in 2018 with the correction hitting harder in the detached housing market rather than apartments.</p>
<p>The CoreLogic-Moody’s Analytics Australian Home Value Index Forecast, 2017Q1 said although the rise of housing supply has been more prolific in apartments—for every house, 1.23 apartments were approved between 2013 and the end of 2016—detached-home values have grown significantly more than unit values.</p>
<p>"House values in the city have increased 47 percent over the past four years, while apartment values have risen a relatively muted 23 percent," it said.</p>
<p>"Home values in Melbourne remain buoyant; prices rose 12.8 percent from January 2016 to January 2017.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/04/11/Screen%20Shot%202017-04-11%20at%2010.13.23%20AM.png" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="https://www.urban.com.au/images/2017/04/11/Screen%20Shot%202017-04-11%20at%2010.13.23%20AM.png" alt=""></span></p>
<p> </p>
<p><span>"However, unit prices rose 2.8 percent during the same period. </span></p>
<p><span>"This situation suggests that the coming supply of apartments has already dampened value growth. </span></p>
<p><span>"Apartment values will rise 3.4 percent in 2017, and a period of stagnation will follow through to 2020. </span></p>
<p><span>"Detached-home values are expected to rise 7 percent in 2017, followed by a steady decline through to 2020."</span></p>
</div>
</div>
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jonathanchancellor-7SQnKwU6yx

Melbourne property market correction will hit houses, not apartments: CoreLogic Moody's 

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<div dir="ltr" align="left"><span dir="ltr">The median house price in Melbourne increased 13.9 per cent year-on-year. </span></div>
<div dir="ltr" align="left"><span dir="ltr"> </span></div>
<div dir="ltr" align="left"><span dir="ltr">But the rate of growth in the September quarter was the slowest for Melbourne since the September quarter 2014.</span></div>
<div dir="ltr" align="left"><span dir="ltr"> </span></div>
<div dir="ltr" align="left">
<div dir="ltr" align="left">
<span dir="ltr">The median house price in Melbourne increased 1.3 per cent over the September quarter to $880,902, the</span> Domain Chief Economist, Dr Andrew Wilson said.</div>
<div dir="ltr" align="left">
<div dir="ltr" align="left"><span dir="ltr"> </span></div>
<div dir="ltr" align="left"><span dir="ltr">Median unit prices in Melbourne grew significantly, increasing by 3.4 per cent over the September quarter to a new record high of $506,334. </span></div>
<div dir="ltr" align="left"><span dir="ltr"> </span></div>
<div dir="ltr" align="left"><span dir="ltr">"This means that year-on-year, unit prices have now increased by an incredible 11.4 per cent," Dr Wilson said.</span></div>
<div dir="ltr" align="left"><span dir="ltr"> </span></div>
<div dir="ltr" align="left"><span dir="ltr">"The results suggest that recent record levels of new apartment development have had a negligible impact on price, with demand continuing to absorb higher levels of supply."<br> </span></div>
<div dir="ltr" align="left"><span dir="ltr">While the median rental price for houses in Melbourne remained steady over the September quarter, sitting at $420 per week, rental prices are up 5 per cent over the last 12 months.</span></div>
<div dir="ltr" align="left"><span dir="ltr"> </span></div>
<div dir="ltr" align="left">
<div dir="ltr" align="left">
<div id="1468469170927-5">
<div class="wpb_text_column wpb_content_element ">
<div class="wpb_wrapper">
<p class="domain-table-title">Domain quarterly stratified median house prices</p>
<div>
<table class="domain-table">
<thead><tr>
<td>HOUSE</td>
<td>SEP 2017</td>
<td>JUN 2017</td>
<td>SEP 2016</td>
<td>QOQ %</td>
<td>YOY %</td>
</tr></thead>
<tbody>
<tr>
<td>Sydney</td>
<td>$1,167,516</td>
<td>$1,190,677</td>
<td>$1,079,309</td>
<td class="negative">-1.9%</td>
<td class="positive">8.2%</td>
</tr>
<tr>
<td>Melbourne</td>
<td>$880,902</td>
<td>$869,598</td>
<td>$773,399</td>
<td class="positive">1.3%</td>
<td class="positive">13.9%</td>
</tr>
<tr>
<td>Brisbane</td>
<td>$551,840</td>
<td>$552,874</td>
<td>$531,767</td>
<td class="negative">-0.2%</td>
<td class="positive">3.8%</td>
</tr>
<tr>
<td>Adelaide</td>
<td>$519,517</td>
<td>$520,846</td>
<td>$498,971</td>
<td class="negative">-0.3%</td>
<td class="positive">4.1%</td>
</tr>
<tr>
<td>Perth</td>
<td>$554,095</td>
<td>$561,391</td>
<td>$567,314</td>
<td class="negative">-1.3%</td>
<td class="negative">-2.3%</td>
</tr>
<tr>
<td>Canberra</td>
<td>$723,980</td>
<td>$693,962</td>
<td>$655,468</td>
<td class="positive">4.3%</td>
<td class="positive">10.5%</td>
</tr>
<tr>
<td>Hobart</td>
<td>$409,592</td>
<td>$392,170</td>
<td>$356,916</td>
<td class="positive">4.4%</td>
<td class="positive">14.8%</td>
</tr>
<tr>
<td>Darwin</td>
<td>$593,329</td>
<td>$615,670</td>
<td>$610,510</td>
<td class="negative">-3.6%</td>
<td class="negative">-2.8%</td>
</tr>
<tr>
<td>National</td>
<td>$819,455</td>
<td>$823,381</td>
<td>$758,367</td>
<td class="negative">-0.5%</td>
<td class="positive">10.8%</td>
</tr>
</tbody>
</table>
</div>
</div>
</div>
</div>
</div>
<div dir="ltr" align="left"><span dir="ltr"> </span></div>
</div>
<div dir="ltr" align="left"><span dir="ltr"> </span></div>
<div dir="ltr" align="left"><span dir="ltr">Similarly, median unit rents remained steady at $400 per week, up 5.3 per cent year-on-year.<br> </span></div>
<div dir="ltr" align="left"><span dir="ltr">“This period of growth marks the 20th consecutive quarter of house price growth for Melbourne. </span></div>
<div dir="ltr" align="left"><span dir="ltr"> </span></div>
<div dir="ltr" align="left"><span dir="ltr">"While house prices continue to grow at a steady rate, unit demand is soaring.</span></div>
<div dir="ltr" align="left"><span dir="ltr"> </span></div>
<div dir="ltr" align="left">
<span dir="ltr">"The latest growth figures are further indication that demand is significantly ahead of supply," </span>Dr Wilson said.</div>
<div dir="ltr" align="left"> </div>
<div dir="ltr" align="left">
<div dir="ltr" align="left"><span dir="ltr">With policies in place to further restrict investors, it’s likely that rental prices will continue to rise, with fewer properties available, he added.</span></div>
</div>
</div>
</div>
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j.ballantyne1990-6AQqhLzZaK

Melbourne unit prices hit record $506,000 median: Domain

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<p>BIS Oxford Economics has reversed its forecast that Melbourne will suffer a surplus of apartments.</p>
<p>Faster-than-expected population growth now meant the city would be in balance or potentially face an undersupply as recent census figures showed the state had 109,000 more people than previously expected.</p>
<p>"If you translate that into households, it's close to 35,000 extra households in Melbourne," BIS managing director Robert Mellor told The Australian Financial Review.  </p>
<p>"We thought it would get to a 20,000 excess [of apartments] in Victoria by 2018. We're now saying in 2018 the market has still got an undersupply of about 2000 dwellings. We're talking a 20,000 turnaround."</p>
<p>The findings reflect other census figures showing the proportion of students rose to 27 per cent of demand for inner city apartments in 2016, up from 20 per cent five years earlier, Mr Mellor said.</p>
<p>BIS forecasts apartment commencements in Victoria have shrunk from its 2015 peak of nearly 19,800 to a likely 2021 trough of 7200. </p>
<p>"It'll start picking up more significantly from 2021-22 and beyond," Mr Mellor said.</p>
<p>"At this stage, we're not predicting the next boom will be as big as the current boom."</p>
<p>BIS says Sydney and Brisbane will also suffer a decline in new housing starts, but that Sydney's reduction would be less severe in relative terms and Brisbane was already in a position of oversupply that would take some years to absorb. </p>
<p>New high-rise housing starts in NSW were likely to near-halve from its estimated 2017 peak of nearly 32,000 to just over 16,000 in 2020.</p>
<p>Queensland would see commencements drop by more than two-thirds from more than 15,000 in 2016 to just over 4,000 by 2020, BIS forecasts.</p>
<p>The lack of new supply down the track would push rents higher and provide more of an incentive for institutional investors to back the built-to-rent sector, Mr Mellor said.</p>
<p>BIS Oxford Economics had warned of a 15,000-apartment glut in the Victorian capital two and a half years ago.</p>
<p>It repeated the warning last year.</p>
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