Factors behind Melbourne penthouse apartment market: Secret Agent

There are various factors that needs to be considered before an apartment could be considered a penthouse, according to Secret Agent’s latest bulletin.

In their latest bulletin, Secret Agent looked into penthouse apartments across inner Melbourne and said besides occupying the top floor of a medium to high rise building, for an apartment to be considered a penthouse, it also had to have a distinguished floor plan.

“Out of 1,908 apartments sold around inner Melbourne since January 2016 to May 2017, there were only 21 penthouse apartments," Secret Agent said.

“All of these were new, post-90s builds except for 2 warehouse conversions.

“These penthouses were concentrated around the CBD, inner East and inner South suburbs.

“Note that our results were skewed towards the sub-$3 million penthouse market, as information on apartments sold above this value is generally less accessible.

“Most of the apartments in our study are not whole-level penthouses,” the bulletin stated.

Penthouse apartments are much higher than the average price of apartments the group says.

“Unsurprisingly, the average price per square metre of penthouses ($11,076/sqm) is approximately 27% higher than the inner Melbourne average ($8,724/sqm).

“The price per internal square metre of these penthouses decreases as the number of bedrooms increases.

“Generally, 3 and 4 bedroom apartments command higher prices per unit of floor area compared to 2 bedroom apartments due to the oversupply in the broader market.

“However the opposite is true with penthouses, both in terms of price and supply, although there is insufficient data for this to be conclusive,” the bulletin commented.

Penthouse internal spaces are much larger than the average apartment as is the size of the outdoor area.

“2 bedroom penthouses (139sqm) are twice as big as the average 2 bedroom apartment (69sqm).

“As the size of the apartment increases, this difference starts to fall, with 3 bedroom (118sqm) and 4 bedroom (198sqm) apartments closing the gap with their penthouse equivalents (157sqm and 192sqm, respectively).

“While we can safely assume that penthouses are usually larger than your average apartment, there is no consistency in the size of outdoor area.

“Some penthouses have as little as a 7sqm balcony (equivalent to the median balcony size of an average apartment), to as much as a 237sqm private rooftop terrace.

“Through observation this is usually dependent on the individual apartment building; if the rest of the building has little to no private outdoor space, the penthouse is no exception,” the bulletin advised.