Melbourne’s high-rise hangover could last years

Nerida Conisbee, REA Group’s chief economist, has believes that Melbourne’s high-rise hangover could last years.

Conisbee told Sky News that Melbourne’s CBD will likely “continue to dominate in terms of very high-levels of vacant apartments” due in part to regular shutdowns and an unwillingness and/or inability of workers to return the the CBD.

Consibee also noted that the collapse in immigration, and international student numbers in particular, will weigh on Melbourne’s inner-city apartment market.

International students dominate the high-rise market in and around Melbourne’s CBD and their absence is a key reason why rental listings have more than doubled since the COVID-19 pandemic began:

It is also why Inner Melbourne rents have tanked, down 11.2% according to CoreLogic:

Realistically, the oversupply of inner-city apartments won’t abate until Australia’s international border is reopened and immigration (international student) flows resume.

Immigration is the key driver of household formation and rental demand in Melbourne (as well as Sydney), especially with regards to high-rise apartments.

Unconventional Economist
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Comments

    • Oddly enough, yes, prices in Melbourne for high units are heading back up in many inner areas. The exception being Dockland/Southbank/CBD/Carlton which are heavily student dominated.

      Right now we are playing musical chairs with more people than chairs and the property market including units is buzzing. But there are plenty of spare chairs on the side or in the delivery truck outside. Plenty of buyers at the moment so when the music stops each weekend prices stay high. But I can’t see this deluge of buyers continuing.

  1. pfh007.comMEMBER

    Now we just need to build enough housing so more markets have healthy levels of residential vacancies.

    Keep building and adopt a policy target of maintaining residential vacancies of at least 4%.

    Even now very few post code are at 4% or more.

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