Housing shortages fuel apartment boom
Simon Johanson
August 26, 2010
Several ultra-tall apartment buildings - Grocon recently announced a 90-storey skyscraper on the former Carlton Brewery site - are now selling or in the pipeline.
The frenzy is being echoed in the inner suburbs, where 32 of 94 large residential projects planned for the CBD and inner city moved to the construction phase in the past 18 months. The construction of a 586-apartment building beside the Yarra in Richmond will soon begin.
The growth in apartment building was part of a surge in new-home construction, with Australian Bureau of Statistics figures released yesterday showing a rise of 8.9 per cent in Victoria in the June quarter this year.
The figures confirmed a recovery in new-home building was starting to flow through to real building activity, Housing Industry Association senior economist Andrew Harvey said.
More than $5.5 billion of multi-density construction started in Victoria last financial year - mostly in Melbourne - compared with $1.3 billion the year before, figures from property information group BCI Australia show.
The cost of building projects begun during the past financial year was greater than the cost of the projects scrapped in the downturn the year before, BCI said, which shows developers are getting over restrictive bank finance hurdles and forging ahead with new projects.
Most of those buildings are getting taller and bigger - on average double the size of the apartments built a year earlier - according to another property research group, Oliver Hume.
Projects launched in the first six months of 2010 on average had 150 apartments, whereas those built in the first six months of 2008 had just 61, apartments manager Jamie Kay said.
The figures point to a shift from smaller apartment buildings designed for owner-occupiers to larger ones that satisfy growing demand from local and international investors.
''The market is still driven by developers' ability to reach pre-sales of 60 per cent to 70 per cent, so the launch of larger projects is a sign of confidence in the market,'' Mr Kay said.
Figures from the Real Estate Institute of Victoria show a long-term drift towards more sales of units and apartments as opposed to stand-alone houses in metropolitan Melbourne.
In 19 of 32 local government areas over a 10-year period to 2010, the proportion of apartments sold increased more than sales of detached homes, REIV figures show.
In 11 other municipalities there were not enough sales to make a proper comparison. Only two local government areas showed no change between the number of apartments and houses sold.
Skyrocketing inner-city property prices were also changing buyer behaviour, with professional couples priced out of other homes moving into the apartment market, Mr Kay said.
But community opposition to high-density projects, especially in the inner and middle suburbs, has proved to be a major obstacle to new apartment projects.
Residents in Richmond, Brunswick, Williamstown, Prahran and other suburbs are battling large developments, saying their size destroys their neighbourhoods.
The fight over high-density development may spread further if research from Oliver Hume, which shows an emerging trend for more high-density projects in Melbourne's outer growth suburbs such as a nine-level high rise in Point Cook, is correct.
Simon Johanson
August 26, 2010
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- THERE is a building boom in Melbourne's apartment market and it is being driven by changing lifestyles, housing shortages and overseas investors, experts say.
Several ultra-tall apartment buildings - Grocon recently announced a 90-storey skyscraper on the former Carlton Brewery site - are now selling or in the pipeline.
The frenzy is being echoed in the inner suburbs, where 32 of 94 large residential projects planned for the CBD and inner city moved to the construction phase in the past 18 months. The construction of a 586-apartment building beside the Yarra in Richmond will soon begin.
The growth in apartment building was part of a surge in new-home construction, with Australian Bureau of Statistics figures released yesterday showing a rise of 8.9 per cent in Victoria in the June quarter this year.
The figures confirmed a recovery in new-home building was starting to flow through to real building activity, Housing Industry Association senior economist Andrew Harvey said.
More than $5.5 billion of multi-density construction started in Victoria last financial year - mostly in Melbourne - compared with $1.3 billion the year before, figures from property information group BCI Australia show.
The cost of building projects begun during the past financial year was greater than the cost of the projects scrapped in the downturn the year before, BCI said, which shows developers are getting over restrictive bank finance hurdles and forging ahead with new projects.
Most of those buildings are getting taller and bigger - on average double the size of the apartments built a year earlier - according to another property research group, Oliver Hume.
Projects launched in the first six months of 2010 on average had 150 apartments, whereas those built in the first six months of 2008 had just 61, apartments manager Jamie Kay said.
The figures point to a shift from smaller apartment buildings designed for owner-occupiers to larger ones that satisfy growing demand from local and international investors.
''The market is still driven by developers' ability to reach pre-sales of 60 per cent to 70 per cent, so the launch of larger projects is a sign of confidence in the market,'' Mr Kay said.
Figures from the Real Estate Institute of Victoria show a long-term drift towards more sales of units and apartments as opposed to stand-alone houses in metropolitan Melbourne.
In 19 of 32 local government areas over a 10-year period to 2010, the proportion of apartments sold increased more than sales of detached homes, REIV figures show.
In 11 other municipalities there were not enough sales to make a proper comparison. Only two local government areas showed no change between the number of apartments and houses sold.
Skyrocketing inner-city property prices were also changing buyer behaviour, with professional couples priced out of other homes moving into the apartment market, Mr Kay said.
But community opposition to high-density projects, especially in the inner and middle suburbs, has proved to be a major obstacle to new apartment projects.
Residents in Richmond, Brunswick, Williamstown, Prahran and other suburbs are battling large developments, saying their size destroys their neighbourhoods.
The fight over high-density development may spread further if research from Oliver Hume, which shows an emerging trend for more high-density projects in Melbourne's outer growth suburbs such as a nine-level high rise in Point Cook, is correct.
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