Melbourne council areas with the biggest growth in apartment projects

Christina Zhoutwitter Domain Reporter Jul 15, 2017

Alistair Howe was gutted when he found out his neighbours would be selling their two adjoining Caulfield North houses to apartment developers.

Within an hour, he decided to join them – spurred on by the thought of living next to a multi-storey building – and offered up his family home of 18 years for sale.

The neighbours hope their combined 1717-square-metre block on Hawthorn Road will capture increasing developer interest in Glen Eira, where significant levels of apartment construction is planned.

There were 307 units approved in projects of at least four storeys in Glen Eira during the five months to May — more than double the 135 approved at the same period last year, an analysis of Australian Bureau of Statistics building data by Domain Group chief economist Andrew Wilson showed.

The number of approvals in Glen Eira trails those given the green light in the councils of Melbourne, Stonnington, Yarra and Boroondara, which alone had 559 apartments approved — more than quadruple the 119 last year.

Greater density is generally encouraged along transport corridors to protect the character of the neighbourhoods.

Mr Howe said he raised a family with five children in his three-bedroom house, and expected to live there until he was “too old”.

He added he had “mixed emotions” about the sale, but decided to sell together because it made more financial sense.

“I felt gutted initially because I suddenly thought ‘well, I don’t want to have a three-storey apartment beside me,’” he said. “Then within an hour, I made the decision that I’d join their sale.”

The owners are hoping for between $5 million and $5.5 million for the row of three houses, and would split the sale price based on their land size.

The successful bidder at the July 26 auction would also have the first right of refusal to buy another neighbouring house, with a single dwelling covenant.

202 Hawthorn Road, Caulfield North 

Combining the properties would open up the site to larger scale developments, Gary Peer director Adam Joske said, and it could also achieve a premium of more than 10 per cent.

Although the City of Melbourne continued to record the most approvals for high-rise apartments, the number in the pipeline is weakening. There were 1357 apartments approved from January to May, almost 900 fewer than the same time last year.

Dr Wilson said there could be a perception from developers that the CBD market — where there had been record levels of development — might be over-supplied.

“But I do think it will turn around because the Melbourne market generally is still under-supplied,” he said, adding that prices were rising strongly.

Angie Zigomanis, BIS Oxford Economics senior manager, said tougher rules for foreign investors — prolific buyers in central Melbourne — could have had an impact.

Australian banks tightened lending criteria for offshore buyers against the backdrop of the Chinese government limiting the amount of money moving offshore. On top of this, the Victorian government more than doubled the stamp duty surcharge for foreign buyers last year, from 3 to 7 per cent.

UDIA Victoria chief executive Danni Addison believed it was a case of the market adjusting to changes in planning policy, including height controls and setbacks in the CBD and the new apartment design standards.

“It takes people a while to go back to the drawing board in terms of their project feasibility and work out how to recast the vision,” she said.

Ms Addison said there was also a clear correlation between the increase in planned apartments in the inner and middle rings and demand.

Boutique developments in well-serviced areas such as Boroondara and Glen Eira appealed to downsizers who wanted to stay in the area and young families who could not afford a family home, she said.

Source: https://www.domain.com.au/news/melbourne-council-areas-with-the-biggest-growth-in-apartment-projects-20170715-gxadgh/

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