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Melbourne Real Estate Market commentary

Alastair Taylor's picture

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.


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?"

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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Alastair Taylor's picture


Sydney, Melbourne property markets holding up 'stronger than we thought', says ANZ

Sydney and Melbourne's housing markets are performing more strongly than expected partly because of the large number of migrants flocking to the country's two biggest cities, a senior ANZ Bank executive says.

The banking giant this week put tough new restrictions on lending for apartments in Brisbane and Perth, but excluded the Sydney and Melbourne markets, which have underpinned the housing boom of recent years.

The bank's Australian chief, Fred Ohlsson, pointed to the potential oversupply of units in Brisbane as one reason for the crackdown, which will bar new lending for customers with deposits of less than 20 per cent of the purchase price.

Thousands of new units are also set to come onto the market in Sydney and Melbourne, but Mr Ohlsson said demand had been surprisingly resilient in these cities, thanks in part to high migration.

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Mark Baljak's picture

Melbourne apartment settlements holding up, data from financier MaxCap shows

Apartment settlements are holding up in one of the densest clusters of Melbourne CBD, figures from construction financier MaxCap show.

The financier's records of four buildings it funded in the north-western Elizabeth Street precinct constituting a total 1937 apartments, which it said equated to 40 per cent of total apartment stock to be delivered in the Melbourne CBD, Southbank and Docklands this calendar year, showed little sign of settlement difficulties, said MaxCap chief investment officer Brae Sokolski.

Across all four projects which were almost fully pre-sold, at least 65 per cent of apartments settled within the first two weeks of the settlements commencing, with the remainder of stock settling over the ensuing four-six weeks with minimal evidence of recession, Mr Sokolski said. At least half of the buyers were foreigners who required Foreign Investment Review Board approval to buy.

The figures suggested that even at a time of reluctance by local banks to lend to offshore buyers, and Chinese capital restrictions making it harder for people to get money out to complete transactions, buyers were finding ways to settle their purchases and this was a good sign for the ongoing market.

The four projects were Golden Age's Victoria One (160 stage-one units out of a planned total 643 apartments), Hengyi's Light House (627 apartments), ICD Property's EQ Tower (633 apartments) and Mammoth Empire's Empire Melbourne (487 apartments).

In the case of Light House, 98 per cent of all apartments had settled successfully within 60 days of calling for settlements, Mr Sokolski said.

Mr Sokolski said a random sample review of title searches showed that about 58 per cent of the apartments purchased across the four projects were funded by cash, while 33 per cent was through major Australian banks or lenders, and a further 9 per cent through alternate or overseas lenders.

Other developers say they are facing few settlement problems.

Read more: http://www.afr.com/real-estate/melbourne-apartment-settlements-holding-u...

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Melbourne Oracle's picture

Trying to find out information about the rumour Winslow Constructors have taken over Dacland and what the future holds for all Dacland estates around Melbourne.

To know a little, about alot.

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David Matra's picture

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JosephE Richmond's picture
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