Zombies are everywhere. There are a huge number of TV shows and check out the new movie Swiss Army Man with the Harry Potter guy. It is just weird.

Is the Melbourne apartment market a bit like a zombie? According to loads of people it should be dead, after taking a number of hits to crucial areas. But like zombies, it is hanging in there and yet to take a mortal blow.

There have been two significant changes that have affected confidence in the apartment sector; banks tightening lending criteria and state government changing taxation for foreign purchasers. The lending criteria may affect settlements of apartment towers, as people who thought that they could get local finance may now need to find more equity due to being offered a lower LVR. The taxation side will make the purchasing of sites and apartments more expensive.

A lot of commentators have also been talking about an oversupply, but apartments are still selling and there will only be an oversupply if things don't settle. We have not seen any evidence of this occurring yet.

Additionally, the broad hectare land market is also unbelievably strong. No one is predicting the death of this market any time soon despite it also operating at record levels.

The Australian Bureau of Statistics commented that Victoria had an extra 109,800 people arrive in the state by December 2015. Historically around 2,500 apartments have been supplied into Melbourne each year. In the next 3 years, there are expected to be 24,000 completed in Melbourne. Whilst this is a big jump in new dwellings, we are taking in a far a big number of new people and most are coming from locations where apartment living is the norm.

For us here at Kingfisher business is booming with a 36% increase in the last quarter compared to this time last year in jobs in the development sector.

We have recently placed two General Managers with off shore funded organisations who are planning new apartment developments in Melbourne. These groups have projects that are still in planning stages. We are also actively recruiting for apartment developers across the board. A lot of local developers have moved away from high rise into more low rise and boutique developments, focused on owner occupiers. The CBD market is most at risk of a decline, but inner ring remains solid.

Offshore groups that are feeding offshore buyers have a different mindset to local developers. Local developers want a decent return on equity and a development that makes their risk worthwhile. Offshore developers are looking to create a presence in Melbourne and are more interested in recycling capital, not necessarily focused on a return. Offshore purchasers are similar, looking to have an asset in Melbourne on which they will take a very long term view. Security is a major driver.

If the apartment market is on its farewell tour, we hope it lasts the same length of time as those of Jimmy Barnes and John Farnham.