Apartment prices and rental demand remain strong in Melbourne

By
/ EdgeProp
|
August 29, 2018 1:30 PM SGT
The Melbourne apartment market has remained robust. This comes despite negative sentiment surrounding the Victorian residential market and a high amount of supply activity. Victoria continues to lead the country in population growth, which has sustained dwelling demand and supported both prices and rental values, according to JLL Australia’s 2Q2018 Melbourne Apartment Market Commentary.
Median apartment price growth continues to accelerate across Greater Melbourne
Median apartment price growth continues to accelerate across Greater Melbourne, but some recent evidence suggests that momentum is stalling, says JLL Australia.
In quarterly data, the apartment price growth for Greater Melbourne (for both new and existing stock) increased 6.6% y-o-y to 1Q2018. This is above the five-year annual average rate of 4.5%.
According to JLL Australia, the median apartment price now sits at AU$532,888 ($532,331). However, price growth has weakened in a number of inner-city suburbs. The strong growth for Greater Melbourne is likely being driven by attached dwellings in growth areas and historically high performing suburbs.
Nevertheless, more timely measures such as Core Logic’s Monthly Hedonic Price series, suggests momentum has slowed in recent months. However, the market does appear to be holding better than Sydney.
With inner city apartment completions likely to rise again next year, re-sales on new stock are likely to come under pressure.
Annual median price growth
Source: JLL Research, CoreLogic March 2018
Rental Vacancy and Rents
Rental demand remains strong in Melbourne, as vacancy tightens further and rental growth remains above average, says JLL Australia in its 2Q2018 report.
Despite fears of oversupply in the rental market brought about by the high amount of recent apartment completions, rental growth has remained positive throughout Greater Melbourne.
For instance, rents for two-bedroom and three-bedroom apartments are growing above their five-year averages. However, while growth is still positive for one-bedroom apartments at 2.9%, this is below the five-year...