Victoria property market holds promise for 2020
The Victorian apartment market outlook for 2020 is looking relatively healthy and that is largely being driven by the unprecedented population growth – with the State reflecting a population increase of one million people since 2011 and a further increase of one million expected by 2026.
Apartment development continues in the areas close to the city with 40% of Melbourne apartments this year built in Southbank, a further 19% in North Melbourne and 15% CBD. Monthly owner occupier finance has increased by 2.4% and first home buyers are also coming to the fore with a significant 8.5% increase - now representing 21% of the market. And with the Federal Government’s First Home Buyers Deposit Scheme coming into play at the start of 2020 – it is anticipated that Victoria’s first home buyer market will grow even further again.
But what is also an interesting indicator for Victoria’s property sector is the level of dwelling approvals - which is now at its lowest since 2014 and the apartment market following suit, also at its lowest supply since 2013.
And with 2548 apartments completed to date in 2019, and another 1366 apartments scheduled by December, there is definitely going to be a tipping point whereby demand exceeds supply and Victoria will once again see price growth.
With Australian Apartment Advocacy's recent research showing 93% of Victorian’s are satisfied with their apartment, this further indicates there is going to be perpetual growth in this market.
The research also indicated that Victoria apartment owners (3300 national residents surveyed) were professionals or managers (78%) and that they tended to purchase their apartment because of location and proximity to public transport.
79% of respondents also indicated that they had purchased their apartment because of affordability ahead of safety and security or low maintenance.
89% of Victorian investors also believed that their property would increase in value in the next 10 years. And with 9.8% growth in investor lending since May 2019, this is another area that will quickly absorb any excess apartment stock.
With median house prices in Melbourne’s CBD in excess of $1 million and median unit prices at $525,000, Victorians are undoubtedly going to favour apartments more and more and not just because of their price advantage, but because of the fact that they offer other factors, such as convenience, walkability and ease of lifestyle.
With Victorian’s considering themselves as relatively new to apartment living, all the signs are showing that this is a sector certainly geared for growth.
At present the Victorian apartment market represents 22.8% of the National stock, with NSW at 47.7%.