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Melbourne new apartment sizes shrinking again
11 February 2015
The size of one and two bedroom apartments in Melbourne being sold off the plan shrunk in the final quarter of the year, according to a new report by the Oliver Hume Real Estate Group.
The average size of a one bedroom apartment fell from 47 square metres to 44 square metres while two bedroom apartment sizes fell from 62 to 59 square metres.
Just over two years ago, the average size of a new one bedroom Melbourne apartment peaked at 55 square metres while the average size of a two bedroom apartment was more than 70 square metres.
Evidence that apartment sizes fell in the December quarter and are now dangerously close to the minimum size suggested by the state government architect will raise questions about the quality of apartments being built in the inner city.
Last year, The Australian Financial Review revealed plans by the former Liberal Victorian government under planning minister Matthew Guy to impose minimum design standards on new apartments.
Leaked draft guidelines prepared by the Office of the Victorian Government Architect mandating that no apartment be smaller than 37 square metres. They also sought to regulate building depth, orientation, minimum communal space, open space, room ventilation, daylight exposure, soil space for trees, minimum balcony sizes and distance between buildings.
Many believe that the new smaller apartments in ultra high-rise towers, sold in bulk to offshore investors through real estate networks, are of inferior quality compared with the larger apartments in the suburbs aimed at local downsizers.
An independent report by Leanne Hodyl, who is also a co-ordinator of city plans and policy at Melbourne City Council, was scathing of the number of apartments being crammed into Melbourne's high-rise towers and the quality of the apartments they hold.
"It will create a legacy of … homes that lack access to light, air … and that diminish the quality of the streets and parks below," Ms Hodyl's report said.
The Melbourne City Council is also in favour of minimum apartment standards: "We are waiting on the Victorian Government to deliver apartment design guidelines. We would like to see good quality and environmental performance in new apartment design, which includes natural lighting, good layout and size, storage, suitable ceiling heights and appropriate amenities, said Councillor Ken Ong, chair of planning at the Melbourne City Council.
"This is in line with one of the key goals in our Housing Strategy for an improvement in the design quality and performance of new apartments."
Those opposed to minimum apartment sizes and standards – including the Property Council of Australia, Master Builders Australia and many developers –argue they will make apartments unaffordable and out of reach of first-home buyers.
The Oliver Hume Greater Melbourne Off-The-Plan Apartment Market Report found that prices of new apartments also fell over the December quarter – $10,000 for one bedroom apartments to an average of $365,000 and $7500 for two bedroom apartments to an average of $489,500. However, over time prices have not fallen to the same degree as apartment sizes have shrunken.
Oliver Hume recorded 350 active off-the-plan projects comprising 43,300 units across Greater Melbourne in 2014 –the highest number of projects for records going back to 2010.
"The off-the-plan product across Melbourne remains strong and shows no sign of tempering over the near term," said Oliver Hume head of research, Andrew Perkins.
"As has been well documented, demand is being largely underpinned by Asian buying."
Author: Larry Schlesinger, The Australian Financial Review
Image credit: Graham Denholm