Apartment sales slowing across Melbourne

18 November 2015

Herald Sun, 18 November 2015

By Olga Galacho

MELBOURNE’S once red-hot unit market continues to cool, with research showing the number and value of transactions are half the levels recorded a year ago.

According to CoreLogic RP Data, a combined $229.4 million was reaped across 428 sales of apartments in the three months to November. This compares with $450.8 million across 886 deals in the same period last year.

And although the latest figures are up on August — in which 370 units sold for a combined $178.6 million — they are well down on other months, going back to May 2014 when $511 million was paid for more than a thousand units.

Yet, at an average price of $6765 per square metre, the value of the latest sales are holding up relatively well against the average for the past 12 months of $6869 per square metre, CoreLogic’s Melbourne Units Cityscope report found.

Based on findings from Oliver Hume Real Estate Group, which reports the average one-bedroom Melbourne apartment is 44sq m, the drop in price per square metre in the past three months translates to a total loss of $5000, or just under 1.7 per cent, on average for each transaction, compared with the yearly average.

On average, the price of a one-bedroom unit was $302,000 over the past year, whereas the average price in the past three months has been about $297,000.

Some analysts are warning an impending glut of apartments would put more downward pressure on prices within two years, or potentially see many units without a buyer.

Victorian Planning Minister Richard Wynne estimated an extra 5500 units would be built within the next 12 months. He has said that given the number of development applications approved, or in the pipeline, Southbank and its adjoining neighbours are evolving “from an industrial wasteland to the densest suburb in Melbourne”.

CoreLogic’s November statistics revealed 335 existing units were sold for a combined $181 million. Off-the-plan settlements for 85 units were recorded for a total of $47 million. This compares with the 12-month total of $710 million for 1338 built units and $335 million for 625 off-the-plan units.

Total sales for the past year were worth slightly more than $1 billion, a decrease from the previous 12 months to November 2014, where nearly $1.5 billion of transactions took place.

Among the notable apartment sales recorded in the three months to November were: Unit 4807, an apartment on the 48th floor of Zen Tower at 23-37 Therry St, Melbourne, which sold for $2.5 million; and Unit 27 of 50 Bourke St, Melbourne, a four-bedroom penthouse apartment with a roof garden, which sold for $2.12 million.

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