Inner Melbourne buyers ditching off the plan for established units: HTW

Inner Melbourne buyers ditching off the plan for established units: HTW
Inner Melbourne buyers ditching off the plan for established units: HTW

Inner city suburbs such as Port Melbourne, St Kilda, South Yarra, Richmond, Carlton and Fitzroy are worth watching to see if they maintain the capital growth shown over the past few years, according to HTW's February 2017 update.

The valuation firm says that, in particular, established apartments offering functional floor plans and superior living areas are expected to grow due to their attractiveness compared to new off the plan stock.

With the continuing development of large apartment complexes outside the Melbourne CBD, these apartments are usually marketed for lower than off the plan apartments and often provide a superior product, the report says.

“The Melbourne apartment market however is one that should be treated with caution as the threat of oversupply looms large, with the RBA warning that the rush of apartments scheduled for completion in the next couple of years will constrain price growth and also impact rents,” HTW says.

“There is also the increased risk of off the plan apartments not settling upon completion.”

The firm says the inner north western apartment market should be treated with caution due to the large amount of supply particularly in the suburbs of North Melbourne, West Melbourne, Travancore and Parkville. This concern may be contributing to softening values.

At the average price of $950,000 an investor can purchase a house such as the one at 44 Bryon Street, North Melbourne (above) that was sold for $990,000.

Similarly at the average price of $521,000 an investor can purchase a unit such as the one at 307/139 Chetwynd Street, North Melbourne (below) that is available for $520,000.

Inner Melbourne buyers ditching off the plan for established units: HTW

“While North Melbourne had unit capital growth of 5.2%, there was negative capital growth in unit prices in West Melbourne of -19% (Core Logic, 2017).

It will be interesting to watch the performance of this submarket over the year ahead as more supply is released on to the market.”

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Htw North Melbourne

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