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Houses outshone units across Melbourne in 2016, but 2017 may be the year of the apartment for the city.
Paul Nugent, director of Wakelin Property Advisory, says apartment performance was sluggish last year across Melbourne, but it is evident from ABS financing and building approval numbers that the much-needed correction in the multi-unit sector has begun.
“Prices and volumes of new supply in this category will continue to shrink over 2017,” Mr Nugent said, suggesting that demand for units will be bolstered by low prices and supply.
He said residential property performed strongly in Melbourne in the last four years and is likely to experience further growth in 2017.
“Underpinning this view is evidence of persistent buyer demand off the back of lower interest rates and a shortage of stock on the market.
“This shortage of stock is essentially the result of four years of buoyant sales volumes exhausting the pool of discretionary vendors. Eventually, one would expect potential sellers to respond positively to the price growth signal out there, but it hasn’t happened yet and it may not eventuate until sometime in mid-2017.
“Furthermore, the broader fundamentals of the market remain benevolent – a rising population, a relatively steady economy, unemployment appearing to be stabilising around 6 per cent and low interest rates.”
Mr Nugent predicts that in-demand property types in the inner and middle ring suburbs will experience solid capital growth of around 5 to 10 per cent in the year ahead, but lower-demand properties in the high-rise CBD sector and outer suburban areas will see little growth.
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