Melbourne market faces slowdown
Median price growth in Melbourne is threatened by an oversupply of stock and soft economic conditions, a new report from QBE LMI warns.
The Australian Housing Outlook 2012-2013 report prepared by BIS Shrapnel predicted median price growth in Melbourne will slow to around three per cent in 2013/2014.
Through to 2015/2016, growth is expected to total six per cent, or two per cent per annum on average.
In particular, apartments within three to five kilometres of the CBD could see a drop in value, according to BIS Shrapnel managing director Robert Mellor.
Continuing construction within the Docklands area has resulted in an oversupply of apartments in the CBD, Mr Mellor said. Apartments are currently being constructed at a rate “well above underlying demand”, he said.
The report shows current dwelling commencements outstripping average annual underlying demand from 2013/2014 to 2015/2016 by almost 10,000.
The oversupply of stock in Victoria is expected to reach over 25,000 by 2016. The rapid construction of apartments in the CBD may have spillover effects for units in neighbouring areas, Mr Mellor said.
These inner-city properties are set to become “collateral damage from excess stock”, he said.
He predicted it could take four to five years for the market to absorb the oversupply of properties.
Demand for units in the CBD and Docklands is mostly fuelled by overseas investors, he said.