From undersupply to oversupply, nobody can seem to agree on where Melbourne’s apartment market is headed next.
A new voice has lent itself to the Melbourne apartment debate. iBuyNew Group CEO Mark Mendel says despite the seemingly large number of proposed unit developments in Melbourne, it’s unlikely the market will be oversupplied.
“It’s easy to think that, with all the apartment construction currently under way in Melbourne, the city is undergoing an apartment oversupply, but Melbourne will not be seeing an apartment oversupply crisis anytime soon,” Mr Mendel said.
Despite the approvals of more than 140,000 apartments across Melbourne, Commonwealth Bank of Australia is only expecting a completion of 35,000 between 2016-2018, he said.
“These figures suggest that an undersupply of high-rise apartments in the future is more likely than an apartment oversupply,” Mr Mendel said.
“Another important reason Melbourne does not have an apartment oversupply is down to the number of new developments that are failing to start. This is due to stricter lending policies and developers finding it tougher to be approved for finance, especially if they have little or no experience.”
Several property experts have said that they believe stories of the Melbourne market surging towards an oversupply are greatly exaggerated.
The demand is likely to outstrip supply as young professionals, small families and retirees are turning to the apartment market in light of a lack of housing affordability, according to Mr Mendel.
“Apartments are generally more affordable and tend to be well located, close to amenities, transport and schools, creating plenty of lifestyle appeal,” he said.
“If Melbourne wants to continue to be recognised as the world’s most liveable city, which it has been awarded six years in a row by the Economist Intelligence Unit’s liveability survey, then it needs to continue to build quality apartment developments.”