Buyers in Melbourne are becoming increasingly fond of condos; and city skyscrapers are not the only option on the menu.
According to statistics from the Australian Bureau of Statistics, South Yarra and Hawthorn East were both hot spots in the year to August.
There were 1332 individual units approved in South Yarra and 635 in Hawthorn East.
In South Yarra there were 1332 individual units accepted and in Hawthorn East there were 635.
Southbank and Docklands are two of the largest — and still growing — apartment markets in Melbourne, with approval given to August for an additional 1589 and 657 units.
Yet, with 1804 new units authorized, the CBD remains the center of the development action.
The latest CoreLogic RB data indicates that the annual price growth has lagged behind the rest of Melbourne, with 1358 units being sold in the CBD in the year. In South Yarra and Hawthorn North, the average unit price fell by 3.2 percent.
South Yarra’s director Will Walton said in the past ten years, the suburban landscape has been changing with Yarra and Claremont streets lined with apartment blocks. Mr. Walton reported that about 65 percent of the housing belonged to a mix of local, domestic and foreign investors.
According to O’Donoghue’s First National Managing Director Simon O’Donoghue, in Hawthorn East, builders aimed at downsizers— longtime tenants who would not leave. The properties being built were generally large units, priced from $800,000 to $2 million, he said.
Demographer Bernard Salt suggests that the suburban vision did not interest an increasing portion of the Victorian population. Buyers were diverging into two distinct tribes: suburban traditionalists and urban hipsters, he said.
People bypassing a house and land in the outer suburbs most probably bought less than $600,000 for indoor apartments.
He figured many inner city residents would migrate later in their lives to the suburbs, though he noted there was a growing trend of the older generation reclaiming city life when downsizing.
Richard Wakelin, Wakelin Property Advisory Chairman, said condos have the possibility of being a sound economic option, but cautioned against buying new high-rises as an investment.
According to Mr. Wakelin, Rental income was often strong in new developments, but the increasing supply hindered capital growth. In addition, he explained that that older units were more likely to increase in price in low-rise blocks with a large land footprint.
His recommendations for achieving capital growth through an apartment were a total of 20 units in the complex, off-street parking and a large land component.
First time buyers had more motivation to do it because capital growth would allow them to ascend the property ladder in their first purchase, Mr. Wakelin added.
Docklands is one of the biggest housing markets in Melbourne. However, when Danielle Scandrett was looking to move from her lifelong Brighton home, it was the one location she didn’t want to buy.
Also off the table are condos lower than the seventh floor.
Although her purchase of a 36th floor apartment in the Yarra’s Edge complex, she said she was won over by luxury, views and lifestyle offered by the facility.