Units and Houses now even hotter property in Victoria

Units and houses now even hotter property in Victoria, with buyer demand up: REA Group report

November 10, 2016 12:01am

SAMANTHA LANDY

Buyer demand for units in Victoria is up, according to REA Group. Picture: Rob Leeson.

Buyer demand for units in Victoria is up, according to REA Group. Picture: Rob Leeson.

It’s common knowledge houses are in serious demand in Victoria, but new research reveals the state’s apartments are also hot property, despite fears of oversupply.

REA Group’s Property Demand Index shows buyer demand for units has risen 26.9 per cent in Victoria over the past year — beating the nationwide increase of 23 per cent.

The figure, based on views of property listings on realestate.com.au, rose 7.4 per cent in October alone.

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REA chief economist Nerida Conisbee said the boost in demand indicated the number of buyers seeking apartments on realestate.com.au was outpacing the properties being listed on the website.

“(This) is somewhat surprising, given the level of new development across the country,” she said.

Advantage Property Consulting director Frank Valentic said he was also surprised by the data.

“We haven’t noted an increase in the sale of apartments, and the apartments which are on the market are not achieving strong capital growth,” he said.

“Most apartment auctions still only have one or two bidders compared to houses, which on average have five to six.”

Buyers eyeing apartment listings might simply be “keeping an eye out for a good deal”, Mr Valentic said.

“Buyers have become aware that there are some good deals to be made, with it being well publicised that the apartment market is not as strong as the housing market,” he said.

Wakelin Property Advisory director Richard Wakelin said Melbourne buyers unable to afford houses were increasingly gravitating to larger apartments.

The REA report also shows houses have become even more sought after in Victoria, with demand rising a whopping 39.5 per cent in the past year and 8.6 per cent past month.

These figures again outperformed the national increases of 28.5 per cent and 6.8 per cent respectively.

Ms Conisbee said the continued shortage of homes being offered for sale across Australia had caused demand to hit an all-time high, and would likely lead to more price rises.

“Demand for property in Australia is now at fever pitch,” she said.

“Increased demand will continue to be a challenge for affordability, particularly in NSW and Victoria.”

Mr Valentic said housing stock was down as much as 40 per cent on last year in some parts of Melbourne, leading to consistently strong auction clearance rates and “outrageous” sale prices.

REA’s inaugural index, released last month, revealed Melbourne boasted eight of Australia’s 10 most in-demand suburbs for houses on realestate.com.au

Northeastern suburb Warrandyte topped the list, followed by Richmond, Brunswick and Northcote.

REA is Australia’s leading source for residential property listings, with a total average unique audience of more than 5.9 million.

Meanwhile, a new report from the Urban Development Institute of Australia’s Victorian branch shows buyer demand is also up for greenfield land plots in Melbourne.

The median lot price for Melbourne rose 2.8 per cent in the September quarter — the fastest pace of growth since 2010 — to $228,000.

UDIA Victorian chief executive Danni Addison said this meant Melbourne was closing the price gap on Australia’s most expensive land market, Sydney.

“Melbourne’s greenfield market is experiencing rapid price growth, which is obviously concerning from a housing affordability perspective,” she said.

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VICTORIA’S HOT PROPERTY

Demand for all dwellings:

— up 35.8% year-on-year

— up 7.8% month-on-month

Demand for houses:

— up 39.5% year-on-year

— up 8.6% month-on-month

Demand for units:

— up 26.9% year-on-year

— up 7.4% month-on-month

Source: REA Group, based on property views on realestate.com.au to October 31