Melbourne's housing over-supply: Propertyology
GUEST OBSERVER
Contrary to what’s been broadly reported over the last few years, Melbourne’s over-supply concerns are not contained to its well documented CBD apartment market. Our supply heat map illustrates that almost the entire fifteen kilometre Melbourne ring has excess supply in the pipeline.
For the ten (10) year period to the end of 2011, there were 35,226 new dwellings approved in Greater-Melbourne each year. Greater-Melbourne building approvals (housing supply) for the last two financial years is averaging 53,690 dwellings per annum.
Greater-Melbourne’s population has grown by 182,538 people over the last two years [ABS]. This equates to underlining housing demand of 70,207 dwellings, or 35,103 per annum. Basic mathematics suggests that the current housing supply-demand pipeline has a surplus of 37,174 dwellings. If every approved dwelling was constructed this is a big enough surplus to accommodate an entire city the size of Ballarat.
There has been a distinct trend towards more apartments, with attached dwellings representing fifty-six per cent (56 percent) of all building approvals over the last four (4) years, up from the thirty-five per cent (35 percent) ten year average.
Melbourne City is on track to approving 19,000 CBD apartments over the last three years; this is an increase of 158 percent on the annual average from the previous five years. The Melbourne LGA population growth is just shy of 6,000 people per annum and equates to demand for 3,000 extra dwellings compared to the recent average annual supply of 6,300 CBD dwellings. Houston, we have a (big) problem!
Sixteen (16) out of Greater-Melbourne’s thirty-one (31) LGA’s have approved more than fifty percent more dwellings than normal, even though Melbourne’s population growth rate has remained relatively the same.
Recent average annual rates of supply have more than doubled the long-term average in the LGA’s of Darebin, Glen Eira, Manningham, Maribyrnong, Stonnington and Yarra. And, between 50 percent and 100 percent increases in building approvals are unfolding in the LGA’s of Banyule, Bayside, Boroondara, Greater-Dandenong, Hume, Knox, Maroondah, Moonee Valley, Moreland and Port Phillip.
Simon Pressley is Managing Director of Propertyology, a REIA Hall Of Fame Inductee, property market analyst, accredited property investment adviser, and Buyer’s Agent. Propertyology works exclusively with property investors to purchase properties in strategically chosen locations all over Australia.