I have noted previously how Melbourne’s “build it and they will come” approach to construction has seen it rank high-up on the global skyscraper index, and appears to be creating a glut of vacant and unsold apartments, depressing inner-city apartment rents.
Yesterday’s dwelling approvals data, released by the ABS, revealed that the dwelling construction boom has further to run, with approvals for both units and houses in Melbourne rising over the past six months and remaining at elevated levels (see next chart).
Today, The Age reports that Victorian planning minister, Matthew Guy, has this week approved 1,000 units across five high-rise buildings in Footscray and Southbank. The approvals follow recent plans to develop the third biggest apartment building in the world (by floor area) in Melbourne’s CBD, suggesting the apartment oversupply in inner-Melbourne is likely to get worse before it gets better.
Given the long lead times between approval and completion (typically three years for high rise apartments), there is the potential that apartments will still be getting constructed en masse in Melbourne long after the market has turned, exacerbating any downturn.
All of which is great news if you are looking for a place to rent in and around Melbourne’s CBD, with ample choice and relatively low rents likely to remain on offer for a long time to come.
