There is a lot of speculation around about the fear of an oversupply of apartments in Melbourne, but if we look at the exponential predicted growth of Melbourne’s population and the expansion of job opportunities, it is safe to say this is simply shock jock reporting. No one denies that the city centre seems to be more of an international hub; but the choice Melbourne suburbs in the donut remain very much in demand.
Victoria’s population is currently sitting at 6 million people across the entire state and our population is rising at a rate of 100,000 people per year. 75% of the Victorian population are housed in Melbourne – with on average 1800 people moving into the city from rural regions each week. It is expected that the population of the city of Melbourne will explode to over 8 million people by 2051. Victoria has the strongest growth rate of any state in the country, with the largest amount of interstate migration. Melbourne is not only seeing increased migration from within Victoria and Australia, but also our top class education is bringing an influx of international students moving to the city to study.
Investment from interstate has exploded in the last 12 months; with results revealing over 10,000 interstate investors chose Melbourne to invest in over any other capital city. Melbourne and Sydney are the leading states attracting investments, attracting 80% of the total investment approvals from the Foreign Investment Review Board. However with the prices of Sydney soaring, Melbourne is staying consistent and proving to be the more affordable state.
The experts are predicting employment opportunities will have double by 2051, catering for the explosion in population, with a major shift from manufacturing to service based industries. The rate of employment opportunities in the CBD of Melbourne is already experiencing a massive push, with 40,000 employment opportunities being created between 2006-2011. Between 2002-2015, hospitality and retail activity in Melbourne has increased by 55% and is continually on the rise. During this people approximately 2000 new businesses were established in the sector, employing over 22,000 people. So many people who work in the city are striving for more work-life balance and choosing to live nearby in the donut.
Rapid growth in population, centralisation and lifestyle are changing perceptions around preferred types of dwellings, with a major shift being seen to preference of apartment living rather than detached houses.
According to investment expert Urbis “Economic conditions are adding fuel to the demand created by changing demographic forces” – they believe that the historically low interest rates for investors and owner occupiers, the price gap between Melbourne and Sydney dwellings and the “strong demand for central city apartments, superior economic returns for residential developers and discretionary planning approval have influenced the quality and scale of developments”.
Transport in Melbourne will dramatically improve in the coming decade, with the new Metro Rail Tunnel stretching from Domain in the east of the CBD to Arden on the west, will enable 30,000 more commuters to access key corridors in the CBD.
In 2012 the news was “Melbourne the place to be”; but undersupply was the issue. Now 3-4 years on it is oversupply. My view is that supply ebbs and flows. According to the experts, by 2018 we will be back in undersupply.
Image credit to Pixabay