Melbourne’s $1M+ Apartment Market
NPM’s extensive body of $1M+ sales secured through 2017 has reinforced not only our ongoing expansion (pleasingly), but the structural shift occurring at the top end of the city’s apartment market.
The demand for genuine owner occupier apartment accommodation that sits fundamentally in the housing market continues to deepen, particularly within the premiere precincts of the CBD and city fringe. No longer an emerging sub-sector tucked away at the fringes of the housing market, the $1M+ apartment market will likely be the biggest evolving segment of the next 1-3 years as our city matures further.
It is still relatively young, often widely miss-understood, and has some product masquerading as high-end where it really shouldn’t be, but our housing hierarchy has evolved to the point of legitimacy…and it is here to stay. This is not to say that all $1M+ apartments are of luxury quality (as they once had to be to justify the price level), just as not all $2M+ houses can be deemed luxury. The reality is our housing market has moved significantly, and the opportunity to live close to required amenity and support lifestyle choices makes the trade-off in pricing between apartments and other inner city housing alternatives increasingly appealing, or a necessity.
Beyond $2M the market gets serious. Transaction volumes are growing but still in their relative infancy, and the market has traditionally looked at this price point as the benchmark for ‘luxury’. Luxury however is not as it once was. No longer does it relate to just simply to uber-quality, hero views or amenities. Rather, it is increasingly emerging as a more sophisticated and refined concept – the scarcity of the opportunity and difficulty in its replication. Understanding the true position of a building, its specific influences and a 360 degree perspective of how the market is operating (and evolving) is critical to unlocking the right opportunity and justifying premium value.
The process of sale and nature of engagement with the market is also requiring a shifting focus, rooted not in the “selling” of a property and personal hubris, but rather a deeper level of engagement, transparency and market intellect to install confidence in both sides of the deal. Our body of transactions through 2017 has occurred only party in the open market. A significant volume and $ value of sales has occurred off-market, crafted to the mutual benefit of all parties and often against a complex background of considerations. This will continue as the market further matures.
Our collective experience and transactions at these levels of value further entrench our view that understanding the underlying drivers of the sector; the position of individual buildings within the market; current and future influences affecting each property and direct personal engagement are critical in working with key parties and ensuring the full narrative of a property is portrayed.
Interestingly, and reassuringly, the key themes by which we operate continue to come the surface and were reiterated through 2017. Melbourne is on the cusp of understanding high value owner occupier apartments, but the market still has room for maturity. Importantly however, we are certain there is room for higher quality representation and engagement on behalf of vendors in the $1M plus level.
To arrange a discussion about the state of the higher value apartment market, the ongoing evolution of the sector or position of your particular property, please feel free to make contact with us directly.