Is Melbourne’s middle ring the next big thing?

After the expected slowdown in the third quarter, following the changes to stamp duty in July, sales activity increased in the fourth quarter to similar levels recorded in the same period last year. While the market overall remained stable, there were some encouraging results from new project launches in both the inner city and the middle ring.

On average 4.0% of total surveyed dwelling stock sold in the quarter, rebounding from a low of 2.9% in the previous quarter and against a quarterly average of 4.7% over the last 18 months. The average for the middle ring was 5.1% with a selection of new projects delivering well-priced product in accessible locations.

Of the 47 surveyed projects across Inner and Middle Melbourne, 70% of projects have sold more than 70% of their available product. Of these, four projects yielding 211 apartments sold out their last remaining stock in the December 2017 quarter.

Once again new supply remained slow in Inner Melbourne, helping developers move existing stock. Four new projects amounting to 1,828 apartments launched in Inner Melbourne this quarter, compared to five new projects amounting to 1,119 units in the previous quarter. Currently, 47% of actively selling projects are still in a presales stage.

Across Inner and Middle Melbourne, two-bedroom, two-bathroom apartments were the most popular product type in the December 2017 quarter making up 47% of total sales. One-bedroom apartments with a car park were the next most popular product type making up 23% of total sales. Both of these product types increased from the previous quarter, with fewer two-bedroom, one-bathroom and one-bedroom, zero car park apartments transacting compared to the previous quarter.

Two-bedroom, two-bathroom apartments were the most popular product type in the Inner East, Inner South, Inner West and middle-ring precincts. However, the Inner North precinct recorded a majority of one-bedroom apartments with a car park and the Central precinct recorded the majority of sales of one-bedroom apartments without a car park.

Regarding future supply, the volume of apartments approved in the quarter dropped to its lowest level since early 2014. Whilst the quantum of potential supply is greatest in the Central precinct, less than one-third of this is in presales, indicating the pipeline will continue to smooth out as it has continued to in recent years.

• Urbis assessed sales from 47 off the plan projects comprising a total dwelling stock of 9,692 apartments
• In 159 monitored selling projects in Inner Melbourne, over 16,000 apartments are in Presales (48%) and a further 35% have commenced construction.
• Urbis recorded 344 off the plan sales in the December 2017 quarter. Of these, 54% were in the Inner Melbourne area, while 46% were recorded in Melbourne’s middle ring.
• Within Inner Melbourne, 48% of sales were recorded in the Inner North Precinct, followed by the Central Precinct (21% sales), Inner East (18% of sales), Inner West (11% sales) and Inner South (2% sales).
• The weighted average sales price for the December 2017 quarter was $692,592 for the Inner Melbourne precincts and $588,114 for the middle ring.
• Two-bedroom, two-bathroom product accounted for 47% of total sales across Inner and Middle Melbourne, and 40% of total sales in Inner Melbourne (compared to 27% in the previous quarter). One-bedroom apartments across Inner and Middle Melbourne accounted for 35% of total sales, though this quarter a larger majority contained a car park.
• Four new projects amounting to 1,828 apartments launched in Inner Melbourne this quarter, compared to five new projects amounting to 1,119 units in the previous quarter.