Unit approvals in inner city Melbourne are more than double anywhere else in Australia, as strong demand from investors and low interest rates drive a surge in construction.
CoreLogic RP Data research analyst Cameron Kusher says approvals for unit developments nationally are at a record high with investors showing a clear preference for them.
Mr Kusher says inner city Melbourne is already experiencing a high volume of new unit construction and the pipeline keeps growing.
Melbourne inner city has recorded 12,516 unit approvals so far this financial year, more than double that in the second-placed region of inner city Brisbane (5,808), according to regional analysis of Australian Bureau of Statistics dwelling approvals data.
The Gold Coast is the only non-capital city area making it into the top 20 regions for unit approvals.
Mr Kusher says the heightened construction activity, most of which is high-density development, is likely to continue for a number of years.
He says the biggest hurdle for developers may be achieving pre-sales which are generally necessary for project commencement, particularly given that many financial institutions are tightening their lending practices at the Australian Prudential Regulation Authority’s request.
“With a particular focus on investment mortgages this may have an impact on demand from investors who are seemingly a key driver of the surging demand for inner-city units,” Mr Kusher said on Thursday.
Melbourne’s south east and west lead the top 20 regions in Australia for house approvals, followed by three areas in Perth.
Fifteen of those regions are located within capital cities, with the non-capital regions being Geelong, the Sunshine Coast, Gold Coast, Latrobe-Gippsland in Victoria and Bunbury in Western Australia.
DWELLING APPROVALS NATIONALLY
- Unit approvals 45.9 pct of total
TOP FIVE REGIONS FOR UNIT APPROVALS
- Melbourne inner city (12,516)
- Brisbane inner city (5,808)
- Parramatta, Sydney (4,171)
- Sydney city and inner south (3,878)
- Melbourne inner east (3,165)
TOP FIVE REGIONS FOR HOUSE APPROVALS
- Melbourne south east (4,874)
- Melbourne west (4,248)
- Perth north west (4,223)
- Perth south east (4,011)
- Perth south west (3,518)