MELBOURNE UPDATE – MAY 2019

Melbourne, as the second largest city in Australia, and Victoria as the second most populated state, attracted significant funding commitments in the 2019 Federal Budget, along with significant election commitments from both major parties in the lead-up to the Federal Election. Major infrastructure commitments included by the Coalition in the 2019 Federal Budget, and as part of election policies were focused heavily on road and rail projects and include the following:

  • $5 billion towards the Melbourne Airport Rail Link;
  • $475m for the Monash University to Rowville Rail;
  • $225m for the Frankston to Baxter rail upgrade;
  • $1.1 billion to upgrade 13 arterial roads in Melbourne's north and south-eastern suburbs;
  • A $2 billion commitment to the North East Link project to connect the M80 Ring Road with an upgraded Eastern Freeway;
  • $2 billion towards a fast train between Melbourne and Geelong;
  • An investment of $9.3 billion to build an Inland Rail between Melbourne and Brisbane; and
  • $1.6 billion for Regional Rail upgrades across Victoria.

In addition to the above, the Victorian State Government has committed to a $100 billion infrastructure program to commence over the next 12 months. These projects will ensure that there is a high level of infrastructure spending for a number of years. This should in turn continue to contribute to ongoing population growth and strong labour markets.

Market sentiment and sales momentum in the growth corridors continued to soften over Q1 2019. Greenfield lot sales volumes have dropped from an annual rate of 24,000 lots at the peak in 2017 to 6,500 lots in Q1 2019. The reported median lot price for the quarter is $337,000 however discounts, incentives and rebates averaging $20,000 per lot are being offered. That represents a significant fall from the peak median lot price of $355,000 in Q2 2018. With cancellations on the rise, and an increase in resale/on-sale of lots sold off-the-plan, it is anticipated that there will be no improvement in the land sales market until these influences begin to steady during 2020. Long-term greenfield lot demand projections remain at more than 16,000 - 18,000 lots per annum. (Source: Research4/DEWLP/ABS)

With the continued strength of the Melbourne employment market, population growth remains in the order of 137,500 per annum. ABS employment data shows that the strong employment growth in Victoria continues. In the 12 months to March 2019, the total number of people employed in Victoria increased by 123,400. This continues to represent the highest annual employment growth rate in Australia at 3.8%, compared to the national figure of 2.4% growth. The seasonally adjusted unemployment rate in Victoria is 4.9%, lower than the national unemployment rate of 5.2%. Only NSW has a lower rate at 4.5%. (Source:ABS)

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