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.
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
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.
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
SUBSCRIBE & DON'T MISS A SINGLE EPISODE OF MICHAEL YARDNEY'S PODCAST
Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.
NEED HELP LISTENING TO MICHAEL YARDNEY'S PODCAST FROM YOUR PHONE OR TABLET?
We have created easy to follow instructions for you whether you're on iPhone / iPad or an Android device.
PREFER TO SUBSCRIBE VIA EMAIL?
Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.