Amid concerns about a looming undersupply of new dwellings to meet demand from population growth, apartment completions in the City of Melbourne this year are expected to fall to their lowest level since 2013.
Advisory firm Urban Property Australia forecast fewer than 4000 apartments to be added to the key inner-city precinct in 2019, which comprises the CBD, Docklands, Southbank and 11 other suburbs including North Melbourne, Carlton, Parkville, Port Melbourne, and South Yarra.
Beyond 2019, a further 12,600 apartments are under construction within the inner-city suburbs and scheduled for completion by 2022.
However, projects with around 3000 apartments have been shelved including major developments like 555 Collins Street, 85 Spring Street and 383 La Trobe Street in the CBD and on St Kilda Road and Southbank to make way for offices, hotels, and student housing.
With the residential vacancy rate at just 1.8 percent, UPA managing director Sam Tamblyn predicted rents would continue to rise in both the inner city and broader metropolitan areas because of strong interstate and international migration and a declining pipeline of new apartments.
Rents have been rising by 4 percent over the year to reach an all-time high of $530 per week.
According to UPA, 2548 apartments have been completed in the City of Melbourne in 2019 to date with a further 1366 apartments scheduled for completion by the end of the year. Of the apartments expected to be completed in 2019, 40 percent are located in Southbank, 17 percent are in North Melbourne and 15 percent are in the CBD.
Beyond the inner suburbs of Melbourne, dwelling approvals across the state have fallen 22 percent to 58,400 in the 12 months to August 2019, the lowest level since October 2014.
“Looking even further ahead, reflecting the difficulty in developers sourcing development finance coupled with the soft environment of pre-sales, new apartment development will continue to decline,” Mr. Tamblyn said.
Earlier in October, Reserve Bank deputy governor Guy Debelle said a shortfall in housing supply was “quite likely” in the foreseeable future and that would trigger a “larger price response” in property values.
Developers like Evolve’s Ashley Williams, president of the Victorian Urban Development Institute, have also forecast an undersupply of apartments in Melbourne.
Read the full article here https://www.afr.com/property/residential/city-of-melbourne-apartment-completions-lowest-in-six-years-20191029-p535ba
