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Melbourne Real Estate Market commentary

Alastair Taylor's picture
#1

A thread to track market commentary articles from elsewhere.

First up: surprise, surprise? Who'd have thought strong population growth would shift language from oversupplied to potentially undersupplied.

http://www.propertyobserver.com.au/finding/residential-investment/75890-bis-forecasts-no-melbourne-apartment-oversupply.html

BIS Oxford Economics has reversed its forecast that Melbourne will suffer a surplus of apartments.

Faster-than-expected population growth now meant the city would be in balance or potentially face an undersupply as recent census figures showed the state had 109,000 more people than previously expected.

"If you translate that into households, it's close to 35,000 extra households in Melbourne," BIS managing director Robert Mellor told The Australian Financial Review.

"We thought it would get to a 20,000 excess [of apartments] in Victoria by 2018. We're now saying in 2018 the market has still got an undersupply of about 2000 dwellings. We're talking a 20,000 turnaround."

The findings reflect other census figures showing the proportion of students rose to 27 per cent of demand for inner city apartments in 2016, up from 20 per cent five years earlier, Mr Mellor said.

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theboynoodle's picture

Interesting numbers..

105k people is 3.1 persons per household, but what's the sensible average occupancy rate of the apartments coming to market.. 1.5-2? And is the average household size of those additional people really 3.1? That seems high.

If 35k extra households means a 20k oversupply is now a 2k under supply then that suggests 13k of those households will be shopping for houses (or for apartments vacated by existing residents moving to houses). Was there a 13k oversupply projected for houses? If not, where will these people go?

And how have the numbers accounted for the apartments that will be completed but will not be occupied?

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3000's picture

"And how have the numbers accounted for the apartments that will be completed but will not be occupied?"

Bingo.
Also, the current crop of apartments has a large number of vacant stock as well.

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Alastair Taylor's picture

Melbourne rental vacancy to fall on undersupply, SQM says

Melbourne has a tight residential vacancy rate of 1.7 per cent and that will fall lower by 2019 as new housing supply slows due to less investment by local and foreign buyers, SQM Research says.

With a vacancy rate of between 2 and 3 per cent indicating a market in equilibrium, the outlook for Melbourne backs up suggestions - such as that made by consultancy BIS Oxford Economics last week - that the city, like Sydney, will suffer from a shortage of dwellings, rather than a surplus.

"There is nothing in our numbers to suggest the market is about to be hit with oversupply," SQM managing director Louis Christopher said on Monday.

"Dwelling completions should peak in early 2018. And given the pronounced year-on-year declines in building approvals, we believe rents will likely rise at a faster pace in 2018 than what has been recorded in 2017, thus far. We now have mounting concerns for significant rental shortages in 2019 for Sydney and Melbourne."

Read more: http://www.afr.com/real-estate/melbourne-rental-vacancy-to-fall-on-under...

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Development & Planning

Wednesday, September 20, 2017 - 12:00
Designed by Bruce Henderson Architects, the proposal includes 14 levels with ground floor retail and over 100 apartments. Orion Group International is the proponent. A spokesperson for Orion confirmed more than 50% of the building's apartments will have a 2 bedroom configuration and a healthy number of 1 and 3 bedroom configurations.

Policy, Culture & Opinion

Tuesday, September 19, 2017 - 00:00
Toorak Park is the outcome of a decade of development overtones for an expansive and formerly underutilised site abutting Toorak Station. Few projects across Melbourne are larger in terms of site size, with developer Lendlease over recent months applying the finishing touches to 446 apartments and 18 townhouses across a host of buildings.

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Visual Melbourne

Friday, August 25, 2017 - 07:00
The former site of John Batman's home, Batman's Hill is entering the final stages of its redevelopment. Collins Square's final tower has begun its skyward ascent, as has Lendlease's Melbourne Quarter Commercial and Residential precinct already. Melbourne Quarter's first stage is at construction and involves a new 12-storey home for consultancy firm Arup along with a skypark.

Transport & Design

Thursday, September 14, 2017 - 12:00
First mooted early last year, the long awaited facelift to Rebecca Walk looks set to proceed following a call out for "40 energetic street food traders" back in January of this year and planning approvals. New plans were conceived for the largely empty row of pods which occupy the under croft of the Flinders St Viaduct adjacent to Batman Park on the CBD's Northbank.

Sustainability & Environment

Monday, September 4, 2017 - 12:00
The recent BDAV Building Design Awards once more showcased the talents and expertise of Victoria's building designers. 2017 was the 22nd year of the BDAV Design Awards, which aims to "profile excellence in building design, as well as profiling the importance of the building design profession to both the building industry and to the broader community." One project that ticked the boxes was Green Edge.