Melbourne Residential Development Review Issue 1

Detached houses and townhouse approvals on the rise as apartment approvals slow in Melbourne.

 

Following our recently launched Sydney Residential Development Review, Mecone now provides a snapshot for Melbourne, Australia’s fastest growing city.

The Melbourne Residential Development Review (RDR) delivers data to compare and contrast residential growth and growth capacity trends for our two largest capital cities.

The data shows that while more dwellings are being approved in Melbourne every year, in the second quarter of 2017, detached house and townhouse approvals are on the increase while apartment approvals decline. Over the last five financial years, the annual number of dwellings approved across metropolitan Melbourne has increased from 36,539 in 2012-13 to 54,168 in 2016-17. This includes increases in annual approvals for all dwellings types between 2012-13 and 2016-17: detached houses from 17,429 to 25,586; townhouses from 6,260 to 10,864 and apartments from 12,850 to 17,718. However, the mix of dwelling types has remained relatively stable over the period. Multi-unit developments (comprising both townhouses and apartments) have made up between 52% – 55% of all dwelling approvals each year, with the exception of 2014-15, which saw multi-unit development increase to 60% of all approvals.

In Sydney, multi-unit approvals have also increased in number but comprise a higher percentage of all dwelling approvals, accounting for 65% of all approvals in 2011-12 and increasing to 69% in 2015-16.

Recent median sale price data shows greater investment demand in detached housing in metropolitan Melbourne. Over the yearly period from April 2016 to end of March 2017, the median prices for detached houses grew for all metropolitan Municipalities. Both Moreland and Frankston Council’s recorded the largest annual growth in median sale price at 24%. Over the same period, median price for multi-units showed lower or no price growth in most municipalities. This may suggest apartment supply keeping up with demand in most municipalities.

Analysis of the sale and rental price figures of the RDR indicates that two-bedroom apartments in the central sub-region (including Maribyrnong, Melbourne, Port Phillip, Stonnington and Yarra Council areas) return 4.75% of the median property sale price in one year. The second highest return of 4.1% is for two-bedroom apartments in the western-subregion (including Brimbank, Hobsons Bay, Melton, Moonee Valley and Wyndham Council areas).

Development capacities remain generous for all growth areas of Melbourne. Wyndham has the most number of lots (102,998) identified for immediate or future residential development. Out of all lots identified, Wyndham has the most developed lots (21%) and also the highest number of lots ready for immediate residential development (60,115), while Melton is the least developed (6%) and has a greater number of lots (38,251) requiring further planning.

Mecone will be updating the reviews on a half yearly basis. Updates will incorporate recent changes in data as well as revisions based on market conditions and demand.

A copy of the Melbourne Residential Development Review can be downloaded here

 

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