High-rise apartment blocks are already a dominant feature of our major capital city skylines. It’s somewhat inevitable that an increased population will bring with it greater density in inner-city areas and skyscrapers will bear prominence. The recent announcement of the new “super tower” planned for Melbourne’s CBD – the tallest skyscraper in the southern hemisphere – reaffirms this.
Melbourne in particular has undergone a recent boom in unit construction, leading to record levels of supply in this sector of the market. Most of the accommodation has been sold to foreign investors who have no restrictions when it comes to purchasing off the plan – and without knowledge of Australia’s housing market and our home buyer predominant preference for detached dwellings, or “boutique” apartment buildings, overseas buyers often see high-rises as an attractive investment venture.
From an owner-occupier perspective, unless the purchase is for one of the “luxury” units in a high-rise block, the relatively small one- and two-bedroom apartments featured as “affordable” tend to fall into the investment sector of the market due to tight lending restrictions banks impose on first-home buyers.
In addition, the high owners’ corporation fees set aside to service the lifts and other security features necessary in tall buildings tend to deter a large proportion of owner-occupiers from downsizing into high-rise accommodation rather than smaller apartment blocks or townhouses.
It’s therefore no surprise that much of the accommodation is set aside as serviced apartments or student rentals and as such, offers limited investment potential for capital growth-seeking buyers.
Anyone who follows my column will know I’m not a fan of high-rise accommodation – however, I concede there is a market for it – albeit a somewhat limited market. The restrictive provision of inner-city land supply necessitates we go up rather than out (although this needs to be balanced with an adequate supply of lower-density inner suburban developments to fulfil requirements from families).
However – if we are really to maintain our “liveable” status – particularly in Melbourne (currently holding top spot on most “best/liveable city” surveys) we must get it right.