Mark Mendel, the CEO of iBuyNew Group Limited, said Melbourne is included to facing an undersupply of new apartments. Its rapidly growing population will make Melbourne the first city in Australia to reach a population of eight million. Because of this, more people will be looking for new apartments. When that happens, the city will not have enough apartments to cater the needs of a fast-growing population.
In a report by Property Observer, Mendel believed that many proposed apartments would not be developed. In addition to that, many of the developers who have sought and acquired the approval for building apartments actually have no intention to pursue their projects. This will further inflate the approvals and provide an inaccurate forecast about the number of apartments that could rise within the city.
Mendel also stressed that Melbourne will not experience any oversupply crisis although it would seem as if that would happen in the near future because of the good number of residential apartments in the pipeline. Take for instance the data released by the Commonwealth Bank of Australia. It revealed that there were 140,000 apartments approved to be developed in Melbourne. However, only 35,000 apartments are expected to be completed until 2018.
The iBuyNew Group Chief also stressed that Melbourne would not experience an apartment oversupply because the lower volume of new developments that have commenced. Among these are larger and high quality apartments. Murray added that Melbourne needs to continue building top quality and innovative apartments if it wishes to remain as the world’s most livable city according to a survey conducted by the Economist Intelligence Unit.
Last year, Tim Gurner, the founder of the luxury property developer, Gurner, echoed similar sentiments. According to Broker News, Gurner emphasized the increased demand for apartments. He cited the opening of two apartments last December wherein they received more than 450 prospective tenants, a lot higher than their expectations, which were only between 20 and 30. He said the claims that there was an oversupply in Melbourne apartments were untrue. He maintained his stance over the last 12 to 18 months and reiterated that there is an undersupply of apartments within Melbourne.
During the first month of 2017, industry experts also denied claims that Melbourne is in danger of oversupply this year. According to Realtestate.com.au, the city may instead, face a shortage because many green-lit project has failed to start with their developments. They also noted Murray’s concern that many developers acquired permits but actually had no intentions of building. Take for instance the figure released by CBRE that showed only 543 of the 4148 units in the pipeline have started. Beller Project Marketing Associate Director Heath Thompson said the shortage could be worse because several developers are merging their smaller one-bedroom units to create two-bedroom homes, which attracted more buyers. This practice was particularly obvious at Forza Capital’s Supply Co in Richmond, which saw the number of planned apartments decline to as low as 130.