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Are there too many apartments being built in Melbourne?

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This is the highest number of permits issued in 13 years of Victorian Building Commission data and 42% more than the 1,800 issued in 2010.

The following graph from the Victorian Building Commission shows the trend in non-detached building permits issued over the years.

 

Victorian Building Commission

At the same time the number of permits issued for the building houses has declined moderately over the last decade.

Detached housing building permits issued

 Detached housing building permits issued

Source: Victorian Building Commission

It’s mainly in the CBD

Despite the current oversupply of inner CBD apartments, developers must be feeling confident as inner Melbourne registered a 22.1% increase in building permits in 2011 with most of this being for new apartments developments.

My thoughts

The pendulum always swings to far in either direction.

We build too many properties, the market slumps, so builders and developers stop. Time moves on and we eventually develop a shortage of properties so builders and developers get back into the market and start building again.

With many banks currently requiring sixty to eighty percent presales to finance new developments, it is likely that many of the proposed projects won’t get out of the ground.

However I’m concerned with the number of new apartment buildings currently being built in Melbourne at a time of decreased demand.

This oversupply is not good for the Melbourne property market and I’d definitely steer clear of off the plan and CBD and near CBD apartment purchases. With all the supply in the pipeline there will be a glut of apartments, pushing down both prices and rentals



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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


'Are there too many apartments being built in Melbourne?' have 1 comment

  1. Avatar for Property Update

    November 15, 2013 @ 11:41 pm Budget Apartments in Bangalore

    It’s good and valuable content posted with beauty visualization includes the information about apartments built in Melbourne. Thanks for creating a post on this particular subject.

    Reply


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