A Surge of One Bedroom Sales in Inner Melbourne as Investors Beat the Stamp Duty Deadline

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This is the first time in over 3 years we have seen one-bedroom, zero-car apartments dominate.

In the middle-ring, two-bedroom, two-bathroom product accounted for 38% of total sales, lifting the weighted average sale price for this product type to $628,000. “The weighted average sale price for two-bedroom, two-bathroom product in Inner Melbourne is $856,000.

Looking more centrally, in the Central Precinct it is almost $900,000 and close to $1.3 million in the Inner East Precinct. As always, many buyers are trading off space, location and price.  Some will choose a one-bedroom apartment without a car space in the Central or Inner East Precinct in the low $500,000s as it suits their lifestyle or rental ambitions at a lower price point than a two-bedroom apartment in the middle ring.

For others, the growing volume of two-bedroom stock in the middle ring represents an opportunity to leverage city-wide infrastructure improvements. Together, these options highlight the increasing choice available as the Metropolitan apartment market matures.

Although the traditionally popular two-bedroom apartment accounts for approximately 50%, of future supply, one-bedroom product is also sitting high at almost 44% of future supply – which is in line with current sales trends. “The level of one-bedroom product sitting in future supply in Inner Melbourne exceeds the other States,” Mr Dawson said. “In comparison, in Sydney 32% of future supply is one-bedroom and studio product, in Brisbane it is 38%.  After a sustained delivery of two-bedroom stock, we are seeing a slight swing back towards one bedrooms on the back of particularly strong rental demand and wider affordability conditions in the market.”

Nine new projects launched amounting to 1,700 units this quarter. However, only five projects (1,100 apartments) are expected to launch next quarter, as the Melbourne apartment market takes stock of conditions following the changes to stamp duty concessions and the restricted lending environment.

Mr Dawson said that each of the five Inner Melbourne precincts, and the middle-ring, has its own advantages which work to attract buyers. “The Inner East Precinct continues to attract a significant premium, with high quality projects targeting owner occupiers and downsizers, who are looking for exclusivity but with walkable amenity. However, the Central, Inner North, Inner West and Inner South Precincts are able to offer a variety of apartment types at a range of price-points – attracting owner-occupiers and investors,” Mr Dawson said. “Combined with the rise of the more affordable middle-ring apartment market, we are starting to see greater choice permeate the wider Metropolitan market.”