Apartments to remain a key driver of Melbourne’s growth

While 10 projects had sold out at the close of Q3 2015, a near equal number of projects were launched for sales in Q4, totaling some 2,000 apartments that came to market as developers took advantage of the weather and the festive season.

Reflecting more broadly on future supply, we observed a spike in activity in the middle of 2015, with a high volume of development applications submitted, particularly within the Central precinct, prompted in large part by the timing of the Metropolitan Planning Levy.

By the end of the year in Q4, while the bulk of future supply continued to be concentrated in the Central precinct, there were early signs that uncertainty stemming from the interim controls had already started to apply the brakes to future development in the central city.

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As at Q4, less than half of the central city development pipeline was approved, leaving some uncertainty over timing and ultimate volume of projects in application.

Looking ahead, the latest amendment C270 raises the prospect of further moderating future supply numbers in the Central Precinct.

In the interim, Urbis is currently monitoring 11 new projects in inner Melbourne anticipated to launch early in 2016 and could bring some 3,000 new apartments to the market. A number of these will be surveyed in our Q1 2016 report which will serve as a continued barometer of purchaser demand and development opportunity in our changing city.

• The weighted average sales price of apartments in Melbourne is $699,705 in Q4 2015, having ranged from $690,000 – $730,000 throughout 2015.
• Based on the surveyed data, the Inner North* remains the most affordable precinct in Melbourne to buy a new apartment, with an average weighted sale price of $518,230.
• Based on the surveyed data, Central* remains the highest priced precinct with an average weighted sale price of $742,830.
• The Inner West* precinct has seen a weighted average sale price of $570,600, an increase of $54,350 compared to Q3 2015.
• The two-bed, two-bath product remained the most popular across all precincts, equating to 45 per cent of total sales.

*Central suburbs include Melbourne CBD, Melbourne (St Kilda Road), Docklands, Southbank and South Wharf.

*Inner North suburbs include Brunswick, Brunswick East, Princes Hill, Parkville, Carlton North, Fitzroy North, Clifton Hill, North Melbourne, Carlton, Fitzroy, Collingwood and Abbotsford.

*Inner East suburbs include East Melbourne, Richmond, Cremorne, Burnley, Toorak, South Yarra, Prahran, Windsor and Armadale.

*Inner South suburbs include Albert Park, Balaclava, Elwood, Middle Park, Port Melbourne, Ripponlea, South Melbourne, St Kilda, St Kilda East and St Kilda West.

*Inner West suburbs include Flemington, Kensington and West Melbourne.

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