This article is from the Australian Property Journal archive
APARTMENT sales in Melbourne have slowed, according to Urbis.
The latest Melbourne Apartment Essentials report for the final quarter of 2016 says apartment sales overall are slowing, as is the rate of supply additions.
“We’d usually expect to see some uptick on the back of Lunar New Year followed by the effects of a race to the finish in Q2 as efforts to boost investor sales ramp up in advance of the stamp duty concession changes on 1 July,” Urbis director of property economics and research, Mark Dawson said.
“This will coincide with some big projects that are ready to launch and those that are being fast-tracked so would expect a further kick in sales in the central precinct,” he added.
Tighter planning in the central city, a stripping back of tax incentives and increasingly rigid controls on project and purchaser funding are all expected to have their say, as some banks increase their rates independent of Reserve Bank changes to the official cash rate.
Dawson said that future absorption from record population growth, tightening of rental vacancy rates amid increasing housing affordability issues and government policy will present further opportunities for apartments.
“Whether purchased or rented, there is continued dwelling demand where the jobs are and Melbourne is well placed in that sense, but it will take time to see the full combined impact of first home buyer concessions, investor restrictions and supply moderation as the various policy, regulatory and market levers are pushed and pulled,” he continued.
The report found prices grew over the quarter in the inner north and inner west, whilst dipping overall as the central, inner east and inner south precincts all witnessed falls.
However, Dawson said there was no evidence of a pullback in pricing, with prices often moving around on a quarterly basis, with this example owing to luxury sales in the previous quarter.
The weighted average sales price for inner-Melbourne was just under $658,000, which Dawson said offered some hope to first-time homebuyers.
Around 35% of projects came in below $600,000 and would qualify for stamp duty exemptions under the new thresholds introduced on 1 July 2017.
A further 45% of apartments would come in under the sliding scale up to $750,000.
Central city sales slowed, however, 10 surveyed projects had already met presales targets, and other precincts were likely impacts by short-term demand conditions.
About 25% of projects surveyed moved 6% of total volume in the quarter. The top 10 performers sold 15%.
Dawson said that the latest research figures give a fair reflection of the conditions in the market, with supply volumes starting to scale back as financial and regulatory measures apply the brakes.
He said this has a dual impact upon sales volumes in the short-term, but well-designed projects will continue to appeal to a sizeable market.
“Future launches will give a more genuine indication of market appetite for central city projects, since there has been some easing of momentum at the tail end of major projects,” he added.
Dawson said successful suburban projects are delivering similar sales numbers on a quarterly basis compared to central precinct projects, as market appetite continues to spread to the suburbs.
Australian Property Journal
