There are more apartments being built in inner Melbourne right now than at any time in history.
Some experts are saying the construction is being driven by overseas investment, and that prices of the apartments will drop when they get re-sold due to oversupply.
This year, nearly 6000 new homes will have been completed in the City of Melbourne, which is three times the annual average for the last decade.
To add to this, another 6000 are expected to be finished in 2015 in the council area that includes the CBD, Southbank and Docklands.
Knight Frank research director Richard Jenkins spoke to The Age.
“The next couple of years are going to have the biggest annual supply of apartments that Melbourne has ever seen,” he said.
Mr Jenkins estimated that around 40 per cent of the future residential developments in the city were driven by offshore developers.
The record numbers have some concerned that supply could well exceed demand in coming years.
Angie Zigomanis from BIS Shrapnel highlighted these concerns when speaking to the The Age.
“If you’ve bought something new, off the plan today, I suspect you’ll find…three years from now, it’ll be less than what you paid for it if you tried to resell it,” he said.
Melbourne council data shows 18,737 homes from 99 developments have been approved and are set to start construction in the next two years. Some 48 more developments are awaiting approval, and that would mean a further 23,241 homes. Nearly half of these developments will be for the CBD.
A ‘home’ includes houses, apartments, studio apartments and student apartments.
Savills divisional research director Glenn Lampard doubted whether all of the planned developments would definitely go ahead when he too spoke to The Age.
“If the vast majority of them were built we would certainly see an oversupply, but I would imagine it would be absorbed as the population increases,” he said.
Melbourne council deputy planning chair Stephen Mayne said he didn’t know how sustained the growth of new homes would be, but that it gave us a good idea of where we were heading.
“What the research does is show us what Melbourne could look like in the next decade,” he said.