The construction industry is bracing for the arrival of a surge in home construction in Melbourne.
The average cost of a home is expected to soar from $7.4 million in 2020 to $9.2 million by 2031, with some projects expected to be worth more than $10 million.
Melbourne’s first-home buyers are on the riseThe median price of a property in Melbourne has jumped from $4.5 million in 2016 to $5.1 million in 2021, according to data from the Australian Bureau of Statistics.
That rise in prices has resulted in the demand for second homes becoming more intense, with many people planning to move to the city to build up their financial nest egg.
“I would be really surprised if that rate of growth does not increase,” said Paul Williams, chief executive of Melbourne Property Partners, which is managing the construction of two properties for investors in the city.
“If you want to be really ambitious and want to buy a home, Melbourne is a really good place to start.”
The growth of the Melbourne property market has been fuelled by the booming population growth in the state.
The number of people living in Melbourne’s CBD doubled from 576,000 in 2016, and the number of households has grown from 14,600 to 19,900.
But the demand has been driven by a lack of affordability in the suburbs, and a surge of young people moving to Melbourne to start families.
The average price of the median-priced property in the suburb of Glenelg jumped from about $1.6 million in 2015 to about $2.4 and the average price for detached properties in the outer suburb of Southbank jumped from more than half a million to more than three million.
“We’ve seen a significant increase in young people who are looking to move out of their parents’ home,” said Mr Williams.
“They’re getting older and they’re moving out of the suburbs and into the city and then finding that the city doesn’t offer as much housing as they’d hoped.”
The more affordable you are, the more you’re going to have a strong need for more affordable housing.
“What you see in the inner city is really a really important component of that.”
The influx of young buyers has resulted also in the arrival in the CBD of a number of first-time home buyers.
The numbers of first home buyers in Melbourne increased from 1,914 in 2016-17 to 2,939 in 2021-22.
That number is expected increase by more than 30 per cent to 3,955 homes by 2021.
But Mr Williams said a number are now opting to move into the suburbs instead of the city, while the number who are living in the cities is expected decrease.
“It’s really important that there’s some competition for first-hand experience,” he said.
“There’s no doubt that the demand is there for first homes, but there’s also an opportunity for first homebuyers to be able to get their foot in the door in the community.”
He said the increase in first home sales has also resulted in a drop in the number renting in Melbourne, with the number declining from 1.6 to 1.4.
“For those who are renting, it’s a huge issue.
There’s just no way around it.
There are a lot of empty apartments and people are finding that there are more places to live in the capital.”
You can’t find a home anywhere else in Melbourne.
“Mr Williams said the number building properties would likely remain at around 1,500-1,700 per month in the next two years.
He said it would be hard to build a house on the current market because it would not be profitable to rent a property, and it would require a huge investment.”
A lot of the young people that are coming into Melbourne and starting families are finding it really hard to find a property,” he explained.”
So I think you’ll see a lot more young people looking at other options.