55,000 new dwellings required in VIC for next 35 years
According to the latest forecasts by Victoria’s government, the population of Victoria is expected to almost double in 35 years, with the population of the inner and middle suburbs growing by one million people.
Melbourne does not face an oversupply of new apartments. The truth is that Victoria’s population is rapidly growing and we need to think long term, not short term. Yes, there will be a number of new apartments completing over the course of the next few years, but once all this new supply has been absorbed by the market, Melbourne will still be majorly undersupplied, especially if the population continues to grow at the expected rate.
Victoria in Future 2016 is the state government’s latest population forecast. The report forecasts Victoria’s population to almost double within 35 years. Inner and middle Melbourne suburbs will be the most affected, with an additional one million people calling this region home within this timeframe.
In order to house the state’s population by 2051, an additional 2.2 million dwellings will be required, or on an annual basis, 55,000 new dwellings are required every year for the next 35 years.
As Melbourne has been continuously ranked the world’s most liveable city for six years in a row by the Economist Intelligence Unit’s liveability survey, this is adding to the city’s great appeal and strong population growth, helped by its good economy, excellent schools, universities and hospitals and employment options. However, the city needs to be able to keep up with this growth, otherwise it could soon lose its world’s liveability status if it cannot provide enough quality housing.
Today, we are living in a modern world and want convenience at our feet. We want things faster today than ever before. With new technology becoming even more advanced and communication at our fingertips, we want this same convenience throughout our lives including transport on our doorstep, with cafes, restaurants, shops and schools all close by. We want to live in a community with everything in walking distance and new apartments allows this lifestyle. We don’t want to have to drive everywhere just to get the newspaper or milk.
As well as new apartments being well positioned close to core amenities, apartment living is also becoming the preferred household type, particularly because it is more affordable than a home and some developments even have communal amenities such as swimming pools, gyms and rooftop terraces, providing a more enviable lifestyle.
Space will also become more of an issue as time goes on. Although Melbourne does not have the same land constraints that Sydney has due to Sydney being surrounded by the water and mountains, Melbourne will still have to build more vertically in the years to come to accommodate a rising population, particularly within the inner city areas.
As an investor, you are buying property for the long term and you need to look ahead to the future. With an undersupply of apartments, this will lead to price growth, especially as not all new developments are delivered. This is due to a number of factors including stricter lending policies from banks making it harder for developers to get finance, increases to state taxes on foreign investors from 3 per cent to 7 per cent in stamp duty surcharge and land tax surcharge for absentee owners from 0.5 per cent to 1.5 per cent. Other factors include changes in regulation imposed by the Australian Prudential Regulation Authority as well as the introduction of planning controls in the central city and proposed design measures governing apartment development.
According to Charter Keck Cramer’s State of the Market report (period ending June 2016), the Melbourne market is not oversupplied. “Overhang in projects that are under construction or recently completed is in fact lower than the long term averages.”
“The significant elevation in stock overhang has been overwhelmingly caused by the influx of recent releases which have not yet proceeded to construction. It is likely that the previously anticipated levels of future stock will not eventuate due to either withdrawal of marketed projects, delayed construction commencement or deferment of prospective new releases.”
To learn more about buying property in Melbourne and the best places you should be investing, why not get in touch with the team at iBuyNew. Call us on 1300 123 463 to speak to one of our friendly Property Consultants today.
Published on 12th of December 2016 by Marty Stanowich