Is there an oversupply in Melbourne?

Is there an oversupply in Melbourne | RP Data BlogThe question of supply levels is a vexed one, after all a high level of supply can be great for buyers as it can dampen price growth, but as most buyers are sellers too it is not that simple.

The question is also hard to comprehensively answer, as there are a wide range of data sets and stages in the development cycle to compare.

At a citywide level the volume of homes on the market at any given time is a good measure.  In the month ending on the 9th of November there were 4.5 per cent more homes newly listed for sale and 6.6 per cent fewer overall homes for sale in Melbourne. Given values have been rising that suggests that there is not oversupply of homes for sale, buyers are buying the new homes and the older stock is also reducing.

But what of the unit market? A casual glance at the Melbourne skyline shows a lot of new high rise residential towers being constructed. Our data shows that those units are finding buyers. The number of units listed for sale is marginally, 2.4 per cent lower than a year ago, and the overall number of units on the market is 3.3 per cent higher.

That suggests that the supply is exceeding demand to a greater extent than is the case in the houses market. That is not necessarily a bad thing. Over the past decade the state government’s policies to address housing affordability concerns have been centred on increased supply in the inner city unit market and outer suburbs. The data shows that it is working.

Robert Larocca
RP Data Victoria Housing Market Specialist

This was originally published on www.propertyobserver.com.au

About Robert Larocca

Robert Larocca has built a profile over the past eight years as an expert on the Victorian residential property market. He worked for the REIV both directly and as a consultant over 8 years acting as a spokesperson, managing its research department and public policy. He has been a media and government relations consultant and spent a decade working across the three levels of government including as a Councillor and Mayor in the City of Moreland. He has well developed leadership skills in the not for profit sector and has been the Chairperson of CERES Community Environment Park for 9 years.

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