29 Jun Off shore buyers aren’t the only thing driving the market.
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A lot of the recent rise in residential property values has been attributed to off shore buyers. Clearly they love Melbourne and are buying up big, but remember they are prohibited from buying existing real estate. So if it was solely off shore buyer driving up prices, there would be a big discrepancy between off the plan, and existing apartment prices. So what else is at play? Its helpful to remember 20 years ago virtually no one lived in the CBD and apartments were called flats and built during 1960-70’s. In the worlds international cities, apartment living is more the norm than the exception and Melbourne is fast becoming one of the Worlds great International cities. So people are choosing to live in apartment, rather than a house and so more people are buying apartments to live in. Also people are buying apartments to ensure their children will have a stake in the market.
When it comes to apartment living Melbourne is catching up with the international cities which means the recent increase in values is not a short term cycle, it is a fundamental shift in market dynamics that is sustainable. Sydney is ahead of Melbourne in this regard and their recent residential value rise has been more pronounced. In the AFR Weekend Nick Lenaghan wrote about the resurgence of penthouse sales. Lend Lease, MAB, CBUS and others are all reporting strong Penthouse sales to owner occupiers choosing an apartment over a house.
All this suggests the apartment market in Melbourne is valuable for a good reason and in fact has more growth in store if it follows Sydney’s lead.