Oliver Hume

A record 28,000 apartments will go on sale in Melbourne over the next 18 months as rising prices cause a paradigm shift in the inner-city housing market.

The forecast means a doubling of the 14,000 currently being marketed through 370 projects in the inner and middle suburbs.

But according to one of Australia's largest residential project marketing groups, it also means that apartments are replacing single-fronted cottages as the first home of choice in Melbourne's inner suburbs.

"Over the past six to 12 months the established inner-city housing market has become out of reach of upwardly mobile young home buyers," said Jamie Kay, the recently appointed apartment division head of the Oliver Hume Real Estate Group.

Mr Kay said professional singles and couples had historically led demand for cottages in popular inner Melbourne suburbs such as Richmond, South Yarra, Abbotsford, Brunswick and St Kilda.

But with the median inner-city house price now $893,000 and expected to top $1 million next year, buyers were being forced into the apartment market.

Mr Kay, a former Lend Lease marketing executive, has spent more than 13 years working in the London, Singapore, Kuala Lumpur and Melbourne markets.

He now spearheads the apartment division of property marketing giant Oliver Hume, which is the selling agent behind more than 46,000 residential products along the eastern seaboard.

"The paradigm shift is that demand between $400,000 and $650,000 is being met by one- and two-bedroom apartment projects in these areas," he said.

Mr Kay said the ability of Melbourne developers to successfully tailor apartment products meant an entry level price of only $302,500 for studio apartments, which were typically 34sq m.

Mr Kay said Oliver Hume research showed 31 apartment projects had been released since last September -- an increase of 24 per cent over the previous six months -- as banks relaxed restrictions on apartment development lending.

He said while investors continued to be a force in the Melbourne market, future demand would be driven by owner occupiers.

Mr Kay also predicted demand would spill over to the suburbs.

Some 2000 apartments were already being marketed in the council areas of Moreland, Boroondara, Maribrynong, Kingston and Moonee Valley, he said.

Author: Maurice Dunlevy, The Australian
Posted: 26, May 2011
Return to previous articles