City Beat April 2024: Melbourne unit market outperforms houses in March
Unit values in Melbourne grew significantly more than houses in the Victoria capital in March, property data analytics firm CoreLogic's recent data release found.
CoreLogic's Home Value Index found that Melbourne unit values rose 0.3 per cent in March, compared to the -0.1 per cent decline in houses.
Melbourne's median unit value, which incorporates both townhouses and apartments, is now $612,000. Over the past 12 months, Melbourne unit values have risen by three per cent.
CoreLogic also found that Melbourne's gross rental yield rose significantly over the last two years, from 2.76 per cent to 3.57 per cent, driven predominantly by falling dwelling values and sky rocketing rents.
"A rise in rental yields alongside an expectation that housing values could rise and rental markets remain tight for an extended period is likely to be seen as an attractive opportunity for property investors," CoreLogic Research Director Tim Lawless said.
Lawless did note however that new investors entering the market may face cash flow losses unless they can provide a sizeable deposit, given the average investor mortgage rates are around the mid-six per cent range.
What happened in Melbourne’s off the plan apartment market in March?
News in March signalled more positive for the Melbourne off the plan apartment market.
Charter Keck Cramer once again highlighted the demand v supply imbalance that is coming for Melbourne. They said the market could jump anywhere between 25 to 30 per cent over the next 12 to 18 months across several sub-markets.
"Our analysis suggests that the established unit market (townhouses and apartments) will need to continue to reprice upwards (by around 15% to 20%) until the house price hierarchy is once again established," Charter Keck Cramer said.
"It is at this point that new off the plan apartments will be able to be delivered at price points which again make apartment development feasible."
There were some signs of some more supply coming to the market, both now and in the future. Tim Gurner revealed his $1.7 billion Docklands precinct Elysium Fields, which will bring a much-needed 1350 apartments to Docklands.
At Elysium Fields, residents will have access to some of the world’s most advanced anti-ageing protocols and equipment like cryotherapy, IV infusions, dry and infrared sauna, red light therapy, grounding and PEMF beds, alongside access to the Elysian Reverse Ageing Medical Clinic that will provide medical-grade treatments including MRIs, DEXA scans, brain scans, blood testing and personalised health plans.
Designed by Fraser & Partners, Gurner™’s vision also includes over 3,700 sqm of much-needed immersive public landscapes and gardens that will connect residents with the natural world, inspired by the verdant buildings of Singapore that meld the built form with abundant greenery.
The first stage includes three towers totalling 640 dwellings, of which Gurner™ plans to launch the first tower, a build-to-sell offering with 231 apartments, in Q3 this year. Construction of the tower is planned for the same time.
Gurner also revealed that Chicago-based, international architecture firm SOM, the architecture firm who designed the Burj Khalifa, the tallest building in the world, as well as the One World Trade Centre in New York, will design his St Kilda Road project, an $800 million mixed-use project facing Albert Park.
The St Kilda Road project will comprise around 200 apartments across 19 levels, with a focus on large two to four-bedroom apartments alongside retail spaces, food and beverage outlets, and extensive wellness amenities.
A consortium of investors, led by billionaire James Packer, is set to create something different in Balwyn. To be developed by Chapter Group, the company filed the plans for 31 apartments on the 3,862 sqm site at 23 Maleela Avenue, just set back from Whitehorse Road between Balwyn and Deepdene.
Cera Stribley has put together plans, recently submitted to the Boroondara Council, for the low-rise, four-level building which will have a near 60-metre frontage to Maleela Avenue.
There will be 31 apartments across the four levels, 10 two-beds and 21 three-beds, of which 18 have completely different floor plans.
While those two projects are still in their planning stages, new projects are being launched by developers who are seeing pent-up demand for high-quality residential properties in Melbourne's inner suburbs.
National diversified property developer Fortis has officially launched Wiltshire House, its new mixed-use development in the heart of Richmond.
Wiltshire House offers 57 one, two and three-bedroom apartments, as well as premium office space and a modern ground floor retail precinct ideally set just off Swan Street near East Richmond Station.
While ideally located around the corner from the cafes, restaurants and bars Richmond is famous for, Wiltshire House is also home to several resident amenities, including a landscaped rooftop with wellness facilities like a gym, yoga space, sauna, and showers.
Established Melbourne developer Pace also unveiled its latest residential development, Fabbrica Fitzroy, in March.
Fabbrica Fitzroy offers 78 one, two, and three-bedroom apartments, including townhouses with street frontage, tailored to the preferences of owner-occupiers and downsizers.
Award-winning architectural practice SJB has integrated the industrial past of the site into Fabbrica's dynamic future, creating exterior and interior spaces that connect with the contextual fabric and character of Fitzroy.
Pace took an adaptive approach to the project, responding to shifts in the market. The focus on owner-occupiers became paramount, leading to a redesign that increased apartment sizes and catered to downsizers.
The development provides a deliberate emphasis on larger apartments and offers personalisation options for residents.
There was success at the launch of 2135 Point Nepean Drive in Rye last month, one of the first new developments in the Mornington Peninsula locale for decades.
Jellis Craig Projects secured several sales on behalf of Melbourne developer Curtis York, who had Cera Stribley design a boutique development across the road from Rye Beach and in the heart of the village.
Jellis Craig Projects Director Stephen Bowtell says buyers have primarily come from the Metro Melbourne area.
"There's an unrealised market which 2135 taps into and that's city dwellers who want to weekend on the Mornington Peninsula but don't want the space or the maintenance an acreage offers," Bowtell says.
"Acreages offer privacy and space, but there are a large number of those who are wanting to spend the weekend down on the Peninsula and want to be next to the beach, Rye's retail strip, and the Yacht Club, which is what 2135 is bringing to the table."