The average Victorian apartment now costs almost $44,000 more to build than a house as “red tape” starts to reshape the trajectory of the Melbourne skyline.
While often considered the cheapest way into the housing market, demand for broader communal features, rising building costs and regulation have made it the state’s priciest property to build since they surged past houses in 2017.
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Latest Australian Bureau of Statistics figures show the average apartment approved for construction in the past year will cost $490,602 to create, while the typical house costs $451,884.
Townhouses are far cheaper at $396,949 each.
Townhouses like the Bastings St in Northcote are increasingly taking up interest of developers.
Inside the Bastings development.
By contrast, in 2016 the typical cost to build an apartment was $298,849 compared to the average house at $303,736.
A year before that, apartments were almost $30,000 cheaper to build.
With the cost of apartments escalating since 2017, Housing Industry Association chief economist Tim Reardon said the timing coincided with significant government tax changes imposed on foreign investors.
Mr Reardon said that in addition to a rise in prices over the past six years there had been a 50 per cent decline in the number of apartments being approved across Melbourne.
Real Estate Institute of Victoria chief executive Quentin Kilian said the figures should prompt a review of why apartment building costs were so high.
“You have to wonder if there’s a regulatory framework that is working against the cheapest and most effective way to create more housing,” Mr Kilian said.
88 Bastings St, Northcote – Bastings development – for herald sun real estate
The bathrooms at Bastings St, Northcote.
Project marketing and off-the-plan home sales specialist Dominic Ziino said in part the higher cost of building an apartment had to do with more extensive communal features included in the building as well as landscaping, not included in house building costs.
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But with the average apartment cheaper than houses before 2017, the Castran Real Estate director said the reality was that a lot of the cost came from “red tape”.
While this covered important things such as the Better Apartment Design Guidelines, implemented in 2017, as well as fire-safety elements and compliance, he noted the result was that many developers were seeing high and mid-rise complexes as challenging with those that do proceed often focused on downsizers with bigger budgets.
Mr Ziino, who works predominantly with suburban projects and not on CBD towers, said the first-home buyers in the market for off-the-plan homes today mostly had parental help.
“There’s no such thing as affordable apartments right now,” he said.
Another look at the development coming to Bastings St, Northcote.
Instead, townhouses are increasingly taking up interest from developers — and from buyers.
Mr Ziino said a Northcote development named Bastings that would launch with 47 townhouses around August 12, was already 25 per cent sold — despite a display suite still being under construction.
Most of the buyers for the three- and four-bedroom homes have been families who appreciate the location and sustainability credentials.
The townhouses are priced from $1.38m-$2.3m and come with up to two living areas or a work-from-home space.
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For more information contact Dominic Ziino on 0401 333 622, or see bastings.au