By Mark Dawson | 5 Jul 2019

Governments are promoting better transport infrastructure investment all around the country, and Melbourne is no exception.

Developers continue to battle it out for the best sites, preparing for life after the election, waiting for the purchaser pause to come under pressure from reduced supply and greater certainty.

Today, leading property consultants, Urbis have released the latest edition of the Melbourne Apartment Essentials, analysing the sales and supply data captured in the first quarter of 2019.

Quarter one continued from where 2018 left off, with the rate of sale holding up respectably in the national context but down from levels seen in previous years, finding a floor of 7% of available stock selling in the quarter.

We’re seeing greater sales activity at the more affordable end of the market with the Eastern and Northern corridors recording a weighted average sale price of $623,000 and $585,000, respectively.

Mark Dawson, Director at Urbis, said: “Current development constraints will slow the release of new housing over the next couple of years, evident in the reduced approvals and slower sales.

“The challenge going forward is how to revamp activity, unlocking new housing and jobs more broadly, above and beyond the targeted measures promoted in political campaigns.”

Key infrastructure initiatives underway are expected to boost new apartment stock levels. The North East link, for example, is understood to deliver express bus lanes and a long-awaited link between the northern and south-eastern suburbs. As a result, the pipeline is looking bright, with 8,000 approved apartments divided between the Northern and North-Eastern Corridors.

With the Westgate Tunnel and Melbourne Metro Rail still to come, the apartment pipeline is expected to gain momentum linked to these areas as more sites are released and connections improve further.

Melbourne is investing in infrastructure to support the high rates of growth that have been driving housing demand so strongly in recent years. We can see that playing out with opportunities for greater density, liveability and affordability in major urban renewal areas around the city that leverage the NEICs and transport investments.

Despite a growing apartment pipeline, half of which are planned to be two-bedroom products, one-bedroom products were the most popular selling product i the quarter, accounting for 50% of sales. Two-bedroom products are likely to make a comeback soon as the future supply indicates. The North Eastern Corridor has a strong three-bed pipeline, accounting for 20% of future supply in the precinct.

Mr Dawson commented, “Surveyed sales activity leant towards smaller apartments amidst housing affordability pressure, with the fastest selling projects delivering a weighted average price below $700,000 in the quarter.”

Approvals continue to taper off and there will come a time when the slower supply catches up with renewed demand. Therefore, we expect to see more launches throughout the year ahead as developers jostle for position to time the rebound in activity.

Approximately 2,000 new apartments are expected to launch in 2019 with 600 alone in quarter two.

Owner occupiers continue to be a key focus, accounting for 61% of the buyers in quarter one. Domestic investors have been waiting and watching, while foreign investors continue to participate with new sales (1%).

“Rental affordability is in the spotlight and vacancy is tightening. We’ll likely see the emerging extent and direction of tax reform and how this is intended to influence housing supply and affordability in the coming months, post-election,” Mr Dawson said.

  • Weighted average sale price recorded: $621,000
  • 3 project launches in the quarter: 321 new apartments
  • 1-bedroom products most popular product 50% of sales


Contact our Property Economics and Research team to find out more.

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