State of Markets – VIC August 2012
Essential information, plus expert insight on what is shaping the national property market...
VICTORIA
Victoria lags behind in mining boom
Victoria is lagging behind other states and must do more to tap into its mineral resources if it is to see large levels of growth – and therefore create demand in its property markets – a state government inquiry has found.
The state’s share of mineral exploration funding nationally has fallen to two per cent, while the rest of the country is seeing huge benefits from the mining boom, with property investors included.
Mining towns form a key part of many investors’ property portfolios due to their strong demand and rental returns.
Neale Burgess, chair of the parliamentary economic development and infrastructure committee, said the resources industry is crucial to the development of diverse industries in regional areas.
The committee’s inquiry provided 25 recommendations to help Victoria tap into the mining boom.
Inner Melbourne faces oversupply of apartments
Apartment construction in inner Melbourne is on the rise, and investors can expect poor vacancy rates as a result, according to a leading business research house.
The BIS Shrapnel Inner Melbourne Apartments 2012 to 2019 report forecasts a pickup in apartment construction and flags a future oversupply.
The economic outlook that improved following the global financial crisis saw investors flood into the inner Melbourne apartment market, according to senior manager Angie Zigomanis.
“The pipeline of construction in inner Melbourne points to record levels of supply, while activity in inner Sydney is also coming to recent highs.”
Substantial supply in Melbourne is expected in 2013/2014.
“The record levels of new apartment supply in inner Melbourne over 2013/14 to 2015/16 will push the market into oversupply and vacancy rates will rise,” Mr Zigomanis said.
“The high level of competing stock means landlords will be unable to command the premiums that are traditionally available for new apartments, while owners of older established apartments will have to discount the asking rent on their apartments in order to compete,” he said.