By Mark Dawson | 7 Sep 2018

After the cooler conditions in recent months, Melbourne’s apartment market warmed up a notch in the second quarter of 2018, running contrary to the national trend.

Urbis’ latest Apartment Essentials report analysed detailed sales results from 45 developments comprising 9,500 apartments. The 309 sales achieved represented 14% of available stock sold, edging up from 12% in the previous quarter.

Mark Dawson, Director Property Economics and Research, said “It’s good to see sales activity having stabilised following the slowdown from a year earlier.”

“The results from this quarter’s survey indicate around 14% of available stock having sold during the period. By the end of the quarter, our surveys indicate 80% of stock sold within projects actively selling apartments.”

Bucking the national trend is a sign of Melbourne’s continued resilience, backed by both economic and market diversity.

Well-priced entry and mid-market product is selling well and contributing to Melbourne’s nationally competitive price point of $679,000 compared to a national average of $713,000. Meanwhile waterfront, park front, and blue-chip locations continue to draw sales in the million dollar plus market.

This diversity of product is helping to sustain market depth but also shows how far the market has matured in recent years. Apartments are well known for their contribution to the more affordable end of the housing spectrum, but the higher end of the market is increasingly underpinned by lifestyle choice.

Two-bedroom, two bathroom product has been a purchaser favourite, accounting for 43% of the sold apartments across Melbourne.

Mr Dawson noted, “This has been a growing trend over the past few years as annual sales figures show.

“A year ago, two-bedroom, two-bathroom product made up only 33% of sales. We expect this trend to continue, as they appeal to the owner occupier market as well as investors.”

Urbis tracked 16 new project launches in the quarter, which contributed 1,929 new apartments to the market – up 429 from the previous quarter. These figures are expected to rise as 3,050 apartments are mooted to launch in the second half of this year.

That said, the volume of apartments approved reached a new low in the quarter, dipping below the recent floor set in Q1 to 2,278 apartments approved in the second quarter.  Looking ahead the pipeline is thinning out beyond 2020. 

Until the market heats up further, or Victoria loosens the reigns further on Build to Rent concessions, this leaves capacity for absorption of existing approvals but raises questions about delivering housing supply in the most liveable suburbs in the next 5 years.