Since Melbourne was first founded by John Batman in 1835, we have seen residential communities and their buildings develop in the City and surrounding areas in a variety of ways; Houses for the establishment and pastoralist families, workers and visitors.
The period of the Gold Rush from 1851, saw rapid growth in population and wealth, and the establishment of our Parliamentary and Public buildings. By the mid 1880’s Melbourne was one of the richest cities in the world.
The crash of the local property market in 1889 caused the first Depression in our city’s economy (sound familiar). However, development didn’t stop. Melbourne’s population has continued to grow. Now at 4.8 million the population is increasing by some 3.7% – some 185,000 per year, and all these new people need somewhere to live
So why is the property market depressed now?
I am not an economist– or a demographer – but an Architect who has experienced these cycles before
The population has grown, and we have seen a rapid increase in property values due to the lack of affordable housing. We need to have places for people to live at an affordable level. And of course more expensive housing for those looking to ‘upgrade’ their living environment
The downturn in property prices is a ‘correction’ on the ‘overvalue’ of our rising market, but people still need to be housed.
I have seen these cycles before. Most notable when I first started my previous practice; Walker and Yerondais Architectural Partnership, in the late 80’s early 90’s. The ‘recession we had to have’.
During this time, we had recently set up our new office in Little Latrobe street, with a number of significant residential and commercial projects on the go – pretty impressive for a couple of ‘young’ architects.
But it didn’t last long. The Banks got nervous and stopped their funding on previously agreed projects. Almost overnight the building industry crashed. Banks took punitive action against developers and sent many broke.
People still needed to be housed. Our type of architectural commissions changed to suit the then current economy. Rather than upgrading their residence – families where extending and renovating.
There was huge increase in residential refurbishments.
The biggest difference between then and now, is the population growth was much slower, and successive governments stopped spending on public buildings, and even sold off the public assets that they had.
For now, Developers are being cautious. Banks have slowed down money availability, and do not want to cause a repeat crash of the 1990’s
Property prices are ‘adjusting’. Bigger differentials in the higher income and ‘over priced’ suburbs of the inner east and south east, and more stability on the ‘affordable’ suburbs of the north and west.
So are there development opportunities in a downward market?
Of course there are – its all about getting the feasibility right
We can assist investors with preparing feasibility options for development, analysing the market trends and requirements, reviewing all local authority regulations, and establishing suitable yields, and of course designing a building that will achieve suitable return.
The situation is very different now when compared to the 1990’s. Population increase predictions suggest we will reach 5,000,000 in 2020. Population growth means there will be a continuing demand for housing, and commercial industries to service the increase in population.
Affordable housing is required to meet the population growth, for home buyers and renters
Well designed housing at more affordable prices are required in all sectors of the Melbourne market.
If you are looking to upgrade your families living conditions, but nervous about buying and selling in a downward market, you can still accommodate your family in the best conditions. There are opportunities to extend and renovate your home. Purchase a ‘cheaper home with the view to extending within a reasonable budget, to see you into the foreseeable future. Careful design and cost planning will ensure value continuing into the future.
So if you are nervous or unsure about preparing for a property development, or even what to do as your family outgrows your current home; let us help you with a feasibility study first. We can then demonstrate the costs and returns involved to assist you in the decision making process for moving forward.
BY Projects Architecture
10th April 2019