Melbourne is Manhattanising – we’re trading backyards for balconies.
If you were a visitor from overseas coming back after a decade you just wouldn’t recognise the skyline.
Similarly if you live in inner or middle Melbourne you would have observed the changing landscape – houses with large front yards being replaced by units, townhouses and apartments.
Recently the REIV research team conducted analysis into this trend to get a better understanding of how widespread it really is.
Media reports suggest the surge in apartment living is being spurred by booming population growth and Melbourne’s increasing popularity as a provider of higher education.
Busy 24/7 lifestyles may also play a role in necessitating a lower maintenance lifestyle for more and more Victorians.
Here’s the findings of the REIV report:
REIV analysis reveals that units and apartments represent 35.4 per cent of total sales in metropolitan Melbourne which is a similar level to 2007-09 when the sector experienced a huge influx as a result of the completion of high-rise apartments in Docklands (Refer to Figure 1 below).
Before 2007, units accounted for under 30 per cent of total sales, the big change happened in 2007-09 and has stabilised since then, staying above 33 per cent for the past 10 years.
Looking closer at the geographic spread of apartments, there are clear trends in inner, middle and outer Melbourne (refer to Figure 2 on opposite page).
Unit and apartment sales in inner Melbourne reached their highest levels in 2018, accounting for 58.5 per cent of total sales.
Interestingly, in the March 2019 quarter units and apartments in the City of Melbourne recorded both the most affordable median price in the metropolitan area of $410,000 and the highest turnover with 115 dales between 1 January and 31 March 2019 alone.
The inner Melbourne suburbs of St Kilda, South Yarra, Richmond, Southbank and Docklands also recorded large numbers of sales in the first quarter of 2019.
Inner-city living in popular with CBD workers, students and downsizes who want to be close to the action with minimal fuss.
New apartments are also eligible for the Victorian Government’s First Home Owner’s Grant of up to $10,000 for new properties in the metropolitan area and $20,000 in regional Victoria valued up to $750,000.
The REIV has also recorded an increase in demand for apartments in middle Melbourne (10-20km from CBD) with apartment sales accounting for more than 30 per cent of all sales in 2018.
Policy and planning strategies encouraging greater densification along public transport corridors is helping to boost these numbers.
We are seeing increasing levels of subdivision in these middle Melbourne areas, where owners are knocking down older homes and putting several units or apartments on the same block.
‘Granny flat’ type arrangements are also becoming more prevalent for adult children or parents to live on the same property but maintain independence.
Aside from Melbourne, affordable unit and apartment markets can be found in Noble Park, with a median of $423,000 as of 31 March, 2019; Preston where the median is $482,500; Croydon with a $486,500 median; St Kilda, with a $495,000 median; and North Melbourne with a median unit and apartment price of $500,000.
Brighton is home to metropolitan Melbourne’s most expensive unit and apartment market with a $1.02 million median, followed by Bentleigh East at $1 million and Mount Waverley where the median is $900,000.
Not surprisingly, houses remain the most common dwelling type in outer Melbourne, where larger parcels of land can easily accommodate this dwelling type, accounting for 82.5 per cent of sales. Last year alone more than 17,000 houses changed hands in outer Melbourne compared with 3596 units and apartments.
Data reported to the REIV reveals that while sales volumes for both houses and apartments/units was down in 2018, units and apartments had a much softer fall (Refer to Figure 3 on left).
The number of unit and apartment sales in metropolitan Melbourne decreased by 17 per cent comparing 2017 with 2018, while transactions of houses declined by 23 per cent.
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