VIC MARKET OVERVIEW
VICTORIA
VIC Market Overview with Julian White The development site market (and property markets more generally) are poised at one of the most interesting periods in recent times. Pressure from building cost and interest rate rises are in contrary to the shear weight of capital wanting to invest in the sector, very low residential vacancy rates and rising rents. How does the property market in VIC compare to other states at the moment and what are some key trends that are occurring?
environment, instead trending to markets that offer a little more affordability. In Sydney, with a much lesser market impact from the pandemic, was the fastest growing housing market in 2021 at over 33% median house price growth. This pricing challenge has seen a lot of Sydney based developers contact us in so far this year about acquisitions in Melbourne. Brisbane is having a period of very high growth. To the end of Q1 2022, house prices in Greater Brisbane have grown 32%. Brisbane has been the beneficiary of significant interstate migration. There is also a very positive storey regarding forthcoming major public investment because of the scheduled Olympics in 2032. Many Victorian developers have also secured sites or are looking to at present. But the challenge now being seen in a smaller market like Brisbane, is an accentuated pressure on building costs compared to Melbourne and Sydney. There are less Tier 1 builders in this market. What sectors are most in demand? It is less about sectors and more about the quality of the site. The development site market has been biased to quality opportunities essentially since the end of the ‘apartment boom’ in 2018. Good quality sites whether they are for apartment, build to rent, townhouse, housing or retail/commercial uses are aggressively being sought by buyers. Stock of secondary
JULIAN WHITE National Partner Stonebridge
To summarise this simply, and focusing on the east coast markets, New South Wales is most advanced in the cycle, followed by Victoria and then Queensland. After exceptional rises in median house prices across Melbourne from Q3 2020 to Q4 2021 of approximately 29.3%, there has been a general leveling out in the established housing markets since. Big increases in housing stock volumes in 2022 has been part of the reason, as well as chatter on interest rate rises. The trend arising in 2022 is the slant in the market towards more affordable housing options. Greenfield housing markets, whilst growing at lower rates than prior years, have continued to show advancement in pricing. Similarly, apartment values in many inner-city markets have shown meaningful value increases of around 5% over 2022. Essentially, it appears the market has showed signs of slowing at the top end housing market, as buyers consider their borrowing power under a higher interest rate
46 –April / May 2022
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