A whopping 140,000 apartments were approved for construction in Melbourne between 2016 and 2018, according to Commonwealth Bank figures, but only 35,000 will be completed, says IBuyNew CEO, Mark Mendel.
Mendel says despite the strong growth in apartment approvals, Melbourne is still facing a shortfall of new apartments as the city grapples with the fastest growing population in the country.
The number of apartments approved for construction "massively" inflates expectations for the number of apartments that will come on stream, says Mendel. Many proposed apartment developments in Melbourne will never get off the ground, he says, because the developers won't be able to get funding. Other projects are approved without the developers actually intending to build, he said.
"Developers (are) finding it tougher to be approved for finance, especially if they have little or no experience,” said Mendel.
Mendel also said demand for larger apartments has gathered pace, as young professionals, families, and retirees opt to live in apartments, which "are generally more affordable and tend to be well located close to amenities, transport and schools."
“Melbourne will not be seeing an apartment over-supply crisis anytime soon,” said Mendel. "Under-supply of high rise apartments in the future is more likely than an apartment over-supply,” he said.
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