Will Development Change Melbourne’s Real Estate Market?

Rohan Calder
October 27, 2017

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DIRECTOR, AUCTIONEER, LICENSED ESTATE AGENT

Melbourne property development

To meet the needs of the steady stream of new Melbourne residents, both the Victorian government and the development industry are constantly working on new residential, commercial and infrastructure projects.

Is all this activity good news for buyers? Here’s a look at key areas of development and potential impacts on house prices.

Residential development in the CBD

The City of Melbourne’s 3D Development Activity Model shows just how much our city is set to change in the coming years. The number of high-rise buildings already under construction, approved to build or applied for will transform the CBD, Southbank and Docklands with thousands more residential dwellings, hotel rooms and office spaces.

While there are fears of an over supply of apartments across Australia’s capital cities, most forecasters suggest Melbourne still has room to grow, particularly when compared with quieter markets such as Brisbane. If apartment prices do start to fall, it seems likely that the CBD will be first to feel the effects.

In fact, while the Urban Melbourne independent project database shows over 1,000 new developments in progress around the CBD, there are much smaller numbers of new residential dwellings under construction in outer areas such as Melbourne’s southeast and west.

The Metro Tunnel and new train stations

With the aim of freeing up ‘Melbourne’s biggest bottleneck’, the $11 billion Metro Tunnel project is set to create five new underground stations at Arden, Parkville, CBD North, CBD South and Domain.

The Victorian Government says this will enable 39,000 more passengers to use the system during peak periods, which is welcome news for any commuter who needs to travel into or through the CBD each day. For home hunters, these new stations are important to keep in mind – house prices in surrounding suburbs and those connected to the new train line are bound to increase even before the project reaches completion.

Citywide level crossing removals

The program to remove 50 dangerous and congested level crossings across Melbourne is more good news for commuters. The Level Crossing Removal Authority is currently focusing on the Cranbourne-Pakenham line in Melbourne’s southeast, with the aim of freeing up traffic movement on some of the most congested roads in the area.

This is another important area for buyers to watch. In the medium to long term, there’s a good chance house prices will increase in the areas these roads are connected to as commuting becomes that much easier from suburbs that are further out.   

Buy with an eye on future development

For anyone looking to move up Melbourne’s property ladder, staying aware of developments like these is a strategy that will pay off. Buying the right house in the right location is partially a matter of preference, but understanding how future development could increase prices (or cause them to drop) will help you choose a stronger long-term investment.  

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