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The value of approved apartments halved over the last month, according to new data from CoreLogic.
While apartments represent the highest value construction segment in new projects for March, they valued at $3.6billion, compared to $6.1billion the month before.
The total number of new projects recorded by CoreLogic for the Cordell Construction monthly report over March was 1,707. This is 4% higher than in February and 4.6% lower than the five year monthly average of projects.
The construction value of all new projects over March was $12.8billion, up from $12.6billion in February.
However, the number of projects moving into construction stages reached a two year low, with 597 projects. The five year monthly average is 1,009.
CoreLogic commercial research analyst Eliza Owen said: “Most of the loss in the value of works moving into construction was attributable to a $1.4 billion decline in the value of apartment and unit commencements, however, the losses were partially offset by increased commencement value in industrial, commercial and community starts over the month.”
Focusing on apartments as the highest value construction segment for March, she added: “The continued strength in the apartment development space comes from a combination of long-term confidence in east coast cities, particularly close to the inner city suburbs and calls for more housing to address a reported under-supply, particularly in social and affordable housing.”
As an example, Meriton has purchased the City of Sydney council depot site in Zetland. The 1.1 hectare site has the potential to accommodate around 300 apartments. The group also acquired the City Ford site in Elizabeth Street last year, demonstrating a steady confidence in the Sydney unit market.
Owen also said joint venture projects and state government participation in housing is starting to rise in an effort to deliver affordable housing in the cities.
The Victorian Department of Health and Human Services is currently seeking expressions of interest from the social housing sector and private developers to participate in joint venture property development, but selection of a development partner is still in progress. The partnership will enable delivery of affordable, mixed housing on vacant, state owned land throughout Victoria. The program will start with 52 vacant sites that run from Melbourne’s western suburbs to Geelong.
