By Mark Dawson | 14 Jun 2018

Property Consultants, Urbis, have opened a new frontier for Melbourne’s Apartment Essentials in the first quarter of 2018, releasing brand new data on Melbourne’s Apartment Market. Data for five new precincts, following the infrastructure corridors and direction of movers, have now been released for the first time.

Urbis’ Apartment Essentials survey monitored status and supply in 324 projects as well as detailed analysis of 272 sales from 46 developments comprising 9, 300 apartments in the March 2018 quarter. Melbourne’s Inner Ring recorded the majority of sales, comprising 62% of sales this quarter. The Inner West precinct recorded 59 sales (22%) while the Northern Corridor and Central Melbourne both saw an increase in sales from the previous quarter.

The market is changing. We have seen increasing appetite and encouraging performance in projects in the middle ring. As infrastructure investment unlocks new areas, we foresee the market will continue to spread out in terms of shape and size. Therefore, we have expanded our coverage to capture the emerging medium density hotspots.

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Prices increased with a weighted average of $666,000 across the ten precincts, in comparison to $645,000 last quarter. The Western Corridor recorded the highest weighted average sales price at $1.1 million driven by a concentration of high-end owner-occupier sales, while Melbourne’s central precinct averaged $702,000. The high proportion of 2-bedroom and 3-bedroom product (60%) has bumped the price up in the Western Corridor whilst the larger proportion of 1-bedroom products in the Central precinct (37%) reflects the lower weighted average sales price of $702,000.

Two-bedroom, two-bathroom apartments came out on top in the March 2018 quarter, accounting for 43% of sales. This product type was the most popular across all precincts except the Northern Corridor which favoured 1-bedroom, 1-bathroom apartments that offer a parking space (38%) over two-bedroom, two-bathroom (32%).

Two surveyed projects sold out this quarter and a further twenty surveyed projects are over 90% sold.

Fifteen new projects launched this quarter with a total yield of 1,586 apartments. After a stuttering pipeline in recent quarters, fourteen projects are flagged for official launch next quarter, yielding 2,121 apartments.

Melbourne’s middle ring has a growing pipeline with over 13,700 apartments having received development approval and a further 6,501 awaiting council decision. Meanwhile, the apartment pipeline in inner suburbs is looking less robust going forward as existing approvals are coming under pressure from hotel and office development; while large sections of the central city and city fringe have been held up by interventions in the Planning system.

As the first movers in Build to Rent are circling, it remains to be seen what, if any support is available to unleash the potential of the sector in delivering large scale rental housing supply. If the trends of growing rental demand continue, the reduction in investor-backed rental supply leaves the door open for a deficit down the line. We continue to monitor proposed projects with interest and see the potential for Build to Rent to shift the dynamics of our major housing markets.

The Melbourne Apartment Essentials Report found:

  • 272 sales, from a sample of 46 surveys, were analysed in the March 2018 quarter (from developments comprising 9,300 apartments). 
  • The majority of sales were recorded in the Inner West precinct (22%), followed by the Northern Corridor (17%) and the Inner North and Central precincts (15% each).
  • The weighted average sales price for the March 2018 quarter was $666,000, growing by $21,000 since the December 2017 quarter.
  • Two-bedroom, two-bathroom apartments continued to be the most popular product type, making up 43% of total sales. This product type was the most favoured in 9 of the 10 precincts.
  • As two projects sold out and a further twenty tipped over 90% sold, fifteen new apartment projects launched this quarter with a total yield of 1,586 apartments. More than 2,000 apartments are expected to launch in Q2 2018.