Apartments move to Melbourne’s middle ring

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Apartment living is no longer just for CBD dwellers, and precincts like the Inner North, which captured 43% of total inner Melbourne sales, are well set up for apartment living.

“Apartment living is no longer just for CBD dwellers, and precincts like the Inner North, which captured 43% of total inner Melbourne sales, are well set up for apartment living. They provide residents with easy access to transport and neighbourhood character, as well as an affordable entry-point to the market,” said Mr Dawson.

This dispersion of activity throughout Melbourne is a trend expected to continue as more sites become ripe for apartment development in the middle ring. 267 sales were recorded throughout Melbourne’s middle ring area this quarter.

“Moonee Ponds, Heidelberg and Footscray are all markets that we have seen emerge over the past few years,” Mr Dawson said.

This move in the market is supported by push and pull factors. The push factors include a mutually reinforcing market push that nudges purchasers and developers beyond their feasibility thresholds to explore new areas. 

At the same time, pull factors include the city-wide urban renewal focus. On top of transport improvements, planning and investment gravity is growing around the National Employment and Innovation Clusters to provide jobs and services throughout the city. 

Together, these push and pull factors are creating new opportunities.

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We expect to see fewer project launches which will ensure the market maintains a healthy balance of supply and demand.

Melbourne Apartment Essentials recorded almost 500 sales from 47 projects in the March 2017 quarter. Four new projects amounting to 1,471 units launched, compared to 14 developments at 2,878 units a year previously.

Mr Dawson expects project launches, and sales volumes, to drop back as the market continues to self-regulate. “We expect to see fewer project launches which will ensure the market maintains a healthy balance of supply and demand.”

“Of the projects we monitor, 82% of stock has been sold. At this stage of the market it is not about a large reduction in sales or drop in price, but a change in the type of sales we are seeing and where apartments are selling.”  

Mr Dawson adds that “after a more subdued quarter in inner Melbourne, we maintain our expectation of a boost in activity prior to the 1 July stamp duty changes.”

Two-bed, two-bath a firm favourite

Despite fewer sales in inner Melbourne, the weighted average sale price increased to $706,391, a $44,476 increase compared to the December 2016 quarter. This increase was driven by the volume of two-bedroom product selling.

Two-bedroom, two-bathroom product is still a firm favourite, recording 35% of total sales across the market, an increase from 29% in the previous quarter. Mr Dawson said this result was in line with current market trends, as purchasers look to high rise living as a place to call home and not just a place to live or invest.