If you thought there was a property oversupply in Melbourne then think again. According to latest data revealed by the Urban Development Institute of Australia (UDIA), new property supply will not be able to meet future demand in Victoria.
The UDIA is the residential development index (RDI) for Victoria and places Victoria at an index of 112. Although Melbourne currently has a high level of new property construction activity occurring throughout the city, this new supply will not be enough to meet the state’s rapidly growing population in the not so distant future.
If current trends continue, then the forecast from UDIA shows that demand in Victoria will outstrip supply by over 4,000 dwellings. This undersupply of dwellings will spark a rise in dwelling values, pushing affordability out of the window. Melbourne is already the second most expensive capital city in Australia after Sydney, with the current median dwelling price in Melbourne standing at $655,000, compared to Sydney’s $856,000 (CoreLogic data July 30, 2017). Residents in Sydney are finding it almost impossible to get a foothold on the property ladder, and those looking to buy in Melbourne will soon discover this for themselves.
What’s contributing to the property supply?
Both the high population and employment growth have a large part to play in the new housing supply that is coming on board right now. The problem is the years to come. With Victoria’s population projected to rapidly grow and overtake New South Wales, there will be a serious housing undersupply, with not enough new residential developments coming on board to service and keep up with this future demand.
Danni Addison, Victorian CEO of the UDIA stated, “The forward pipeline for the years to come tells a very different story, and the RDI points to a serious housing undersupply. This is cause for major concern both from an affordability, liveability and economic perspective as Victoria’s population only looks [to] increase on recent projections.”
There is already pressure on the property market in Victoria with increased taxes on foreign buyers and less incentives for investors, making it harder to get new developments off the ground and for buyers to purchase property here. And if property prices do start to surge, then affordability will be a great concern.
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If you are considering buying a new property in Melbourne as a home buyer or as an investor, then it’s wise to purchase sooner rather than later, before a property undersupply occurs and prices start to rise.
Melbourne has also just been named the world’s most liveable city for the seventh year in a row
by The Economist Intelligence Unit’s Liveability Survey, and is a great city to invest in. Not only do you have some of the country’s best universities situated in Melbourne, but the economy remains strong and stable and there is a plethora of parks, retail and dining opportunities throughout.
To learn more about our latest Melbourne property for sale, whether you are searching for a new apartment, townhouse or house and land package, get in touch with the iBuyNew team today. Our expert Property Consultants will be able to show you which suburbs have the best capital growth potential and which properties best suit your requirements. Call us on 1300 123 463