Victoria looks to Andrews Government to boost high-density options
Melbourne’s apartment market has long provided an affordable access point into the property market. At a UDIA Victoria breakfast in May, Urbis and CoreLogic presented information highlighting the rapidity at which high-density approvals are dropping in Victoria.
BY DANNI HUNTER
CHIEF EXECUTIVE OFFICER
URBAN DEVELOPMENT INSTITUTE OF AUSTRALIA (VICTORIA)

“Our apartment market is vital in ensuring Victorians have entry-level and affordable access to homes in inner Melbourne, where house prices are often out of reach for the average buyer. Current low purchasing power means we need apartments now more than ever,” said Danni Hunter, UDIA Victoria CEO.

UDIA Victoria were disappointed to see the Andrews Government increase stamp duty surcharges for foreign buyers from 7% to 8% in Monday’s budget. Foreign buyers have traditionally been very active players in Victoria’s high-density sector.

“Our apartment market is crucial to maintaining supply and affordability for Victoria’s housing sector. The highdensity sector has been facing significant headwinds.UDIA Victoria believe this tax increase will only serve to further disincentivise much-needed investor activity in Victoria’s housing market,” said UDIA Victoria CEO, Danni Hunter.

Availability of credit remains the key factor impacting the apartment market. Also contributing to the downturn in the market is the lack of foreign buyers looking to invest in high-density products.

The rates of decline in Melbourne house prices, however, are moderating, having fallen 11 per cent from the peak in late 2017. Clearance rates are also increasing- slowly, but steadily.

“The result of the federal election and early indicators have seen a positive shift in sentiment towards the property market. APRA’s decision to reduce mortgage assessment rates and positive indicators from the RBA also indicate there are a few things about which we can be optimistic,” said Ms Hunter.

Ensuring there is an active pipeline of apartment approvals in Victoria will remain crucial in ensuring there are affordable housing options in well-serviced areas.

A pipeline of high-density approvals in the inner and middle rings of Melbourne are also imperative to meeting the 70/30 target set by the Victorian Government. This target directs that 70 per cent of new housing must be provided within the established suburbs, with the other 30 per cent in emerging suburbs.

“State and local governments need to work really hard in the immediate future to secure an approval and therefore jobs pipeline by taking an enabling approach to development industry proposals, and by sharing the responsibility we all have to develop Victoria in a positive way for future generations,” said Ms Hunter.

UDIA Victoria is committed to informing members and remaining on the forefront of advocacy for the development industry through regular market updates, research and critical insights.

Melbourne’s

house and land
sector looks up
despite weak
housing market
Melbourne’s apartment market has long provided an affordable access point into the property market. At a UDIA Victoria breakfast in May, Urbis and CoreLogic presented information highlighting the rapidity at which high-density approvals are dropping in Victoria.

“Victoria’s new housing market has proven its resilience time and time again.The industry is focused on delivering accessible and affordable housing for all Victorians and will be ready to increase production when the inevitable upswing in the property market occurs,” said UDIA Victoria CEO, Danni Hunter.

Research4’s analysis of Victoria’s land market since 2002 proves the dependably cyclical nature of the market. Today’s presentation revealed that positive price growth in Melbourne’s housing market has only ever ‘dipped’ (using Research4’s metrics) twice since 2002: in 2008 and 2019.

“The data proves what we in the industry already know to be true – that Melbourne’s housing market is incredibly resilient. We expect the market to bounce back like it has plenty of times before, but we have to get on the front foot and address production timeframes and red tape,” said Ms Hunter.

“On average right now, it takes 15 months from the release of land to reach settlement. We need to look at where this

timeframe can be reduced. This is where the Red Tape Commissioner’s review into the planning and building approval system will be vital in re-energising our industry and cutting back red tape in the production process.”

The number of sales of greenfield land products in Victoria were at their lowest in the last financial quarter in approximately eight years. This decrease in land sales cannot be attributed to one single issue, but rather several factors.

“It’s not news to anyone that banks are taking longer and being much more thorough when it comes to approvingloans, therefore it is a more time-consuming process. This in turn is driving more and more people towards the rental market. Victoria’s rental market is
already under increased stress, and we’re not sure how much more it cantake,” she said.

Colin Keane, Director of Research4, highlighted the factors impacting Melbourne’s land market in 2019. The external factors included the restrictions on lending and access to finance, the uncertainty in development policy due to the impending federal election and the marketready active supply in our greenfields. The internal factors affecting the greenfield market include the prices being
set by the industry, the time taken to reach settlement and the production rate of greenfield lots.

The land market is faced with the unique combination of land values in the greenfields market decreasing slightly, concurrent with homebuyers facing limited access to finance. The result is a market that remains competitive, with the demand for stock in this market showing no signs of depleting.

“In Australia, our population reached 25 million people more than a decade sooner than we were expecting. Particularly in Victoria, this growth demands an ongoing supply of housing. The property development industry is relying on the Andrews Government to support and facilitate new housing supply to ensure housing is affordable to all Victorians,” said Ms Hunter.

ABOUT THE URBAN DEVELOPMENT INSTITUTE OF AUSTRALIA

The Urban Development Institute of Australia (UDIA) is a nationally recognised body that advocates for Australia’s urban development industry. In Victoria,

UDIA informs and engages government and industry members, enabling better policy and better business decisions.With a primary focus on the residential property sector, UDIA protects and promotes over 320 member companies across Victoria including developers and a range of other professionals involved in producing, financing and marketing residential property.