There’s an oversupply of apartments in Melbourne, and this is creating plenty of opportunities for savvy buyers who’re willing to research price trends in particular buildings and areas, according to numerous analysts.
Buyers will soon be in a position to purchase units in medium and high-density buildings for below their replacement cost, according to Brian Capp, a professional buyer with Statewide Property Advocacy.
He added that hundreds of apartments are listed for sale in Southbank, Docklands, Richmond, and other areas in inner Melbourne.
“There will be some bargains to be found in the next six to 12 months in the high-rise buildings in the inner suburbs,” Capp told the Domain Group. “Some of the second-hand two-bedroom apartments in the already established buildings, even though they are very small, are going to become an attractive buy because the replacement cost is greater than the price the owners are asking.”
In some parts of the inner suburbs, the surge in new apartment construction has halted price growth for older apartments built between the 1920s and 1980s. At the right price, these units offer good value, as they’re larger than most modern apartments and have high land-to-unit ratio.
According to a new report from Capital Economics, apartment prices could fall by 8% in Melbourne and 4% in Sydney this year.
“Units look much more vulnerable than single dwellings, while Melbourne appears to be the most exposed of the eight capital cities,” said Paul Dales, chief Australia and New Zealand economist at Capital Economics.
Due to a crackdown on lending to property investors, millennials face less competition in today’s real estate market.
“First-home buyers are filling that hole in the market where the investors were, so they’re taking up a lot of stock, especially in the inner apartment market and in the outer suburbs where the price-point is $650,000 or below,” Richard Simpson, president of the Real Estate Institute of Victoria (REIV), told the Domain Group.