Demand for Melbourne CBD apartments to remain steady in 2...

Demand for Melbourne CBD apartments to remain steady in 2020: HTW residential

Staff reporterDecember 7, 2020

Over the past few years, Melbourne CBD has witnessed an influx in supply of new apartments, according to the latest Herron Todd White (HTW) residential report.

The report suggests 2020 should see demand for Melbourne apartments remain steady as approvals for new residential developments hit a peak in 2017 and have since slowed down.

Most of these developments have been high density and located in the northern grid of the CBD.

"A slowdown in the residential development sector could slow the apartment supply, resulting in a boost in demand for rental properties due to strong migration and appeal of Melbourne to international and interstate higher education students and workers relocating closer to the business district, which has continually encouraged strong rental growth and helped maintain current rental returns for these CBD and inner city apartments," the valuation firm said.

A two bedroom apartment in Melbourne CBD has been listed for rent with a price guide of $700 per week.

The two bedroom, two bathroom apartment is situated at 502/9-23 MacKenzie Street (pictured below).

It comes with open plan living, design kitchen and terrace balcony.

The report notes that one of the biggest struggles in the market is settlement for off-the-plan apartments.

It is proving a significant challenge for developers with many of the major lenders tightening or altering their lending policies to foreign investors or contracts subject to the Foreign Investment Review Board resulting in longer than normal settlement periods and further exacerbating settlement risk.

"New developments within city fringe suburbs such as South Yarra, Richmond, St Kilda, Abbotsford and Collingwood are contributing to this concern of oversupply.

"Demand will need to remain strong if supply is to be matched over the medium term."

A St Kilda one bedroom apartment has recently been sold for $406,000.

The 4th floor apartment is situated at 408A/33 Inkerman Street (pictured below).

Demand for Melbourne CBD apartments to remain steady in 2020: HTW residential