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Urbis research shows apartments to remain a key driver of Melbourne’s growth

Interdisciplinary consulting firm Urbis has released its latest figures on the state of Melbourne's apartment sector, providing both an overview of what transpired during the latter part of 2015, while also pointing toward prevailing trends for the remainder of 2016.

According to Urbis, Melbourne's off-the-plan apartment activity continued to gain momentum throughout 2015, despite a number of factors designed to bridle growth such as tightening lending criteria, overseas purchaser surcharges and changes to central city planning controls which have been discussed at length on Urban Melbourne during the last week.

Contained within the Urbis Melbourne 2015 Q4 Apartment Essentials report, figures show that the weighted average price of surveyed projects in inner Melbourne for Q4 2015 was $700,000, having ranged from $690,000 to $730,000 over the course of the 2015.

Project surveys over the year recorded apartments with prices ranging from $310,000 to $4,800,000, demonstrating the spread of product type and a diversified purchaser profile in the market.

Even at a 6% premium, the higher prices recorded in the central precinct remain well below the $1 million average for new apartments in Inner Sydney, reinforcing Melbourne’s value proposition on the east coast.

The Urbis sales survey results serve as a reminder that there are a number of sub-markets operating in inner Melbourne, varied by location, target market and price. With a selection of luxury developments preparing for launch, prices could well extend beyond this range in 2016.

Mark Dawson, Director of Economics and Market Research, Urbis
Urbis' Q4 2015 apartment price summary

Central City Supply Impacted by Planning Controls

Urbis research shows that 10 apartment projects had sold out at the close of Q3 2015, with a near equal number of projects launching their sales campaign during Q4. These fresh launches totalled 2,000 new apartments that hit the market as developers looked to capitalise upon both the improved weather and holiday season.

In terms of planning and future supply, 2015 witnessed an abnormal spike in planning submissions, particularly in the days leading to June 30 as the Metropolitan Planning Levy was implemented on July 1.

By the end of the year in Q4, while the bulk of future supply continued to be concentrated in the Central precinct, there were early signs that uncertainty stemming from the interim controls had already started to apply the brakes to future development in the central city.

Mark Dawson, Director of Economics and Market Research, Urbis

Amendment C270, which plans to restrict the scope of development on both CBD and Southbank sites, raises the prospect of further moderation to future apartment supply numbers in the Central Precinct.

Urbis are currently monitoring 11 new projects in inner Melbourne which they expect to launch during the first half of 2016, with the likelihood that 3,000 new apartments will be taken to market. Urbis have also indicated that a number of these projects will be included within their Q1 2016 report, thus providing a barometer of purchaser demand and development opportunity in what has become a very dynamic Melbourne apartment market.

Urbis Melbourne 2015 Q4 Apartment Essentials report snapshot:

  • The weighted average sales price of apartments in Melbourne is $699,705 in Q4 2015, having ranged from $690,000-$730,000 throughout 2015.
  • Based on the surveyed data, the Inner North remains the most affordable precinct in Melbourne to buy a new apartment, with an average weighted sale price of $518,230. Inner North suburbs include Brunswick, Brunswick East, Princes Hill, Parkville, Carlton North, Fitzroy North, Clifton Hill, North Melbourne, Carlton, Fitzroy, Collingwood and Abbotsford.
  • Based on the surveyed data, Central remains the highest priced precinct with an average weighted sale price of $742,830. Central suburbs include Melbourne CBD, Melbourne (St Kilda Road), Docklands, Southbank and South Wharf.
  • The Inner West precinct has seen a weighted average sale price of $570,600, an increase of $54,350 compared to Q3 2015. Inner West suburbs include Flemington, Kensington and West Melbourne.
  • The two-bed, two-bath product remained the most popular across all precincts, equating to 45 per cent of total sales.
  • Referencing the map above Inner East suburbs include East Melbourne, Richmond, Cremorne, Burnley, Toorak, South Yarra, Prahran, Windsor and Armadale.
  • Referencing the map above Inner South suburbs include Albert Park, Balaclava, Elwood, Middle Park, Port Melbourne, Ripponlea, South Melbourne, St Kilda, St Kilda East and St Kilda West.
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