Changing demographics and high house prices have seen the number of apartments developed in Melbourne increase at a much higher rate than that of new detached houses, according to new research.
Urban Property Australia’s latest Apartment Market report says Melbourne’s metropolitan area has seen an increase of 62,600 apartments in the past 10 years, to a total of 240,695.
This represents an increase of 35 percent over the past decade, compared to a 15 percent increase in houses over the same period.
According to the report, 48 percent of the city’s new apartment stock was located in inner Melbourne. The second biggest increase in apartment stock was recorded in the Dandenong region, with 6657 new apartments coming online over the past decade.
According to Urban Property, in the medium to long-term population growth will drive continued new development and absorb existing stock.
“Prices are not likely to fall substantially given the undersupply of existing housing stock and low vacancy rates, with population in Victoria continuing to grow at a faster rate than the Australian average,” the report says.
It says that metropolitan Melbourne’s population has increased by 9.7 percent over the past five years. The State Government forecasts that Victoria’s population will grow by 3.2 million to 2051.
Over the 12 months to July 2012 an additional 19,411 apartments have commenced construction, 15 percent below new additions in the previous corresponding period, but above the five-year average of 13,270 per annum.
Looking ahead, Urban Property expects a continued “easing on vacancy rates” in inner Melbourne over the short-term, given the pipeline of new supply.
The median unit price increased by 2.3 percent to $450,000 at June 2012, up from $440,000 at March 2012, the report says.
Meanwhile, the total number of apartments transacted over the 12 months to June 2012 increased by 1 percent, but transaction volumes were still 14 percent below those recorded in 2009.