Melbourne developers now building more multi-unit projects than houses: HTW

Melbourne residential developers are for the first time building more multi-unit projects featuring townhouses, apartments and flats than detached houses, according to the October report from property valuers Herron Todd White.

Affordability is the main driver of this shift in development focus as “people are pushed to build smaller more modest, cheaper homes".

“The transitioning mentality of the population in relation to buyer preferences is also another reason as people are developing an interest in terrace housing as it looks appealing and is essentially affordable," says HTW.

This trend was also noted by Australian Property Monitor’s (APM) senior research analyst Clinton McNabb at the recent Melbourne Home Buyer and Property Investor show.

McNabb said comparison between the 2006 and 2011 census data shows rising numbers of single person and childless couple housing occupants, indicating an increasing  demand for higher-density living.

McNabb also said more families are now willing to live in apartments and willing to sacrifice space for location.

The HTW October report focuses on the northern suburbs of Melbourne, where many new residential communities are being developed, and where these macro forces have “put pressure on house prices and influenced demand for product".

“Areas such as the northern suburbs are experiencing a slide in demand since the expiry of the $13,000 new home bonus by the state government which was a huge stimulus for growth in the area,” says the report.

The bonus has been replaced by a with a 20% cut on stamp duty with another 10% discount to follow from January 1, building eventually to 50%.

“Developers have over compensated in suburbs such as Mernda and Craigieburn," says HTW.

“There is a large supply of estate houses for sale in these areas along with developments under construction which are experiencing less demand then what was originally planned for.

“In these areas there is little reason to celebrate as property prices have experienced a drop due to the lack of demand for these products ever since the incentives were taken away.

The report notes that developers have introduced their own incentives but “none are on the same scale of the first home owners’ bonus which led the way for demand for development in the area.”

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