A Looming Glut in Inner Melbourne Apartments?

A recent noteworthy trend in Melbourne has been the surge in foreign investment in local property especially apartment development in Melbourne’s CBD and Southbank areas.  Much of the investment has been driven by Chinese, Singaporean and Malaysia developers.  The Chinese investors have been prominent and various judges expect the volume of housing investment activity originating from China to remain strong over the long term.

The investment has been driven by the relative attractiveness of investment here and constraints placed on dwelling ownership and prices in China for example, designed to curb house price inflation there.  Australia’s foreign investment regime supports overseas investment in domestic housing where it delivers new housing supply (as opposed to competing for existing stock).

There is now evidence emerging that supply is outpacing demand and this may result in a glut of product on the market.  This is good news for housing affordability for those in the inner city apartment market.  There may of course be a slow-down in construction of new stock over the coming years until demand catches up.  That would be bad news for investment and jobs if alternative investment opportunities are limited.

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