HILL PROJECTS ON HOLD AS UNIT PRICES DECLINE

Oversupply, poor transport, tougher lending conditions and higher mortgage rates, particularly for investor loans, are contributing to the free fall in Doncaster Hill apartment prices. Median property valuations in Melbourne and Sydney are expected to drop by up to $1000 a week this year with additional falls in 2019, Shane Oliver, chief economist of AMP Capital, told the Financial Review.

“UNITS LOOK MUCH MORE VULNERABLE THAN SINGLE DWELLINGS”

Bunnings Store and 258 Apartments Delayed
Click to enlarge

The Bunnings three stage development on Doncaster Hill could be a risky venture for Wesfarmers who have just abandoned its disastrous attempt to expand its Warehouse chain into the United Kingdom and Ireland, and have sold the business for a single British pound after having invested $705 Million.

The Doncaster Road proposal, is to be built in three stages. The first stage, which was to have started early last year, will include the construction of

 

the Bunnings store itself plus 99 of  the proposed 258 apartments and associated parking.

Amended Planning Application PL12 022747.01 – 659-669 Doncaster Road, 4-6 Tower Street and 1A-5 Council Street, Doncaster – REPORT (7)

686 Doncaster Rd on hold–off market
Click to Enlarge

The sobering predictions for residential property are not encouraging where prices have already been slowing or falling since last year, and the weekly pilgrimage to Bunnings for a browse and a snag-in-bread may be losing numbers fast, with Morgan Stanley analysts predicting the hardware retailer’s sales growth will halve this year as a result of cooling house prices. Increasingly cautious consumers and growing pressure on household cash flow are likely to see spending on home improvement fall from the lofty highs seen during the peak of Australia’s capital city property price boom, according to Morgan Stanley stock analysts.

Apartment prices could fall harder than house values this year, dropping by 8 per cent in Melbourne, and 4 per cent in Sydney, according to Capital Economics.

Work Stopped on Whittens Lane Luxury Units.
Click to Enlarge

“While prices may only edge lower this year and next, higher interest rates will probably mean they fall more sharply in 2020 and 2021,” chief economist Paul Dales wrote in an analysis on Tuesday. “Units look much more vulnerable than single dwellings, while Melbourne appears to be the most exposed of the eight capital cities.” Melbourne apartments price inflation could fall to negative 8 per cent by late this year, double the forecast fall in Sydney. Brisbane apartments could also be hit, dropping to negative 7 per cent by the end of this year. The forecast for house values is more robust. Capital Economics expects Sydney house price inflation to improve from here, returning to zero growth by later this year. The slowdown is still working through the Melbourne house market, with prices, now up 5.3 per cent, to fall to negative 5 per cent by late 2018.

Pinnacle Apartments
Click to Enlarge

Click on link below for price list of Pinnacle apartments, (632 Doncaster Road), back in March 2011 for comparison with the asking prices of today. $539,000 | Private Sale | 04/06/2018. This two Bedroom apartment was purchased for $553,000 in 2011. The original plan was for 124 apartments plus a motor vehicle sale showroom. A subsequent amendment deleted the showroom to enable an increase of 38 apartments to provide for a total of 161.

Pinnacle Price List

 

12 Responses to “HILL PROJECTS ON HOLD AS UNIT PRICES DECLINE”

  1. Edwin says:

    This current over development and traffic mess is not entirely the fault of the Manningham Council. The high density apartment tower strategy was selected for Doncaster Hill by the government as part of its 2030 program back in 2001. Manningham, after a careful study on the increased capacity of Doncaster Road after the eastern freeway extension, had been working on a four storey limit for the area. Council could have sought permission from its people before it got on board the government plan but it did not. Instead it went through a dishonest process of consultation and employed a number of “experts” close to council to give the government plan the thumbs up.

    • Arnold says:

      There was pressure on Manningham and its Councillors to conform or be sacked and replaced with commissioners like what happened in the 90’s. Worse still it could have been swallowed up entirely in a consolidation plan that would see it cut up among neighbouring councils such as Whitehorse, Banyule, Boroondara and Maroondah.

    • Talford says:

      Manningham yielded to government pressure and implemented the strategy by way of stealth.
      Consultation sessions were held long after plans were adopted, residents never had a say. We all thought the residential strategy, which was to surround Doncaster Hill high rise, would have a limit of two storeys. If the land was 1800 square metres or more a three storey bulding would be approved. This was misleading because three and four storey buildings were to be allowed irrespective of allotment size.

  2. Nick says:

    The success of the first high rise apartment buildings in Williamson Road, next to the hotel had magnificent views of the City across the Eastern Golf Course influenced many of the site owners around the Hill to lodge permit applications. Very few went ahead due to the failure of pre-sale endeavours. Seven years later the Pinnacle development was built which soaked up much of the local demand. Most of the developments that followed were by built by overseas developers who were able take advantage of the government’s easing of restrictions allowing foreigners to purchase apartments off the plan through overseas intermediaries.
    It is not just the introduction of tighter lending that is causing developments to be put on hold but also the lack of infrastructure, traffic congestion, especially the promised railway station, and the non existent employment that is now impacting on resale prospects.

  3. Nick says:

    Evening peak hour traffic flow in Doncaster Road was identified as a problem before the Doncaster Hill strategy was finalised back in 2002 and well after the eastern freeway extension to Springvale Road was completed.
    If this developement proceeds it will be the first Bunnings store located in a principal activity centre and its first venture into large scale apartment construction.
    Other stores such as in Nunawading and Box Hill South are located away from shopping centres and residential streets and have multiple exits and entrances.
    I read a traffic report which said their would be 80 metre long queues of traffic in Council Street opposite the primary school.

  4. Council Street says:

    Why so many apartments on top of the store? It could could have been up and running by now had it not been for the council policy to deliver mixed use developments. With the expansion of Westfield about to be developed it is hard to see how these two major retailers could operate without creating a log jam.. Bunnings were issued with a permit five years ago but still there is no indication on whether they will proceed.

  5. Lever says:

    My guess is that they will sell the land and get double what they paid for it six years ago. It they were going to build on the site it would have started by now.

  6. East of Whittens says:

    Clearance rates at Melbourne Auctions have dropped to 59% this weekend. Apartments being the greatest casualty. We could have a repeat of what happened in the 90’s where people were handing their keys back to the lending authorities.

  7. Sadsack says:

    They have tried to hide the fall in unit prices by building much smaller apartments to make it appear that the market is stable and prices are not spiralling downward. Council are sitting back and doing nothing because they want to see their “plan” for an urban village completed no matter what.

  8. Alf Stead says:

    What are the signs of a housing Bubble?

    While there is much disagreement about what are the necessary factors to declare a housing bubble, here are some commonly accepted ones:

    An attitude where investors treat recent price rises as indicative of the future. “House prices only go up,” would be a typical expression of this sentiment.
    Bubbles often start with real demand and housing shortages, but price rises continue after that demand is satisfied because of the ‘lemming effect’ associated with point one.
    Speculative investors form a growing share of the market and may come to dominate it.
    Falling rental yields are often a sign that speculative demand is exceeding the real demand for accommodation.
    A steep rise in home lending. Bubbles tend to rely on debt funding which is what makes them vulnerable to crashes.
    A decline in lending standards. This can occur when banks themselves start assuming that house prices only go up and become less concerned about defaults.
    Low interest rates have been associated with most financial bubbles as they encourage riskier investments in an effort to generate better returns.
    Housing supply initially lags demand but, as with mining booms, high prices attract developers and a surge of supply often comes onto the market just as demand starts falling.
    A large over-supply of housing and/or restricted or more expensive debt are the typical reasons bubbles pop, although economic weakness and unemployment beyond the property sector can also trigger a crash.

    • Stephen says:

      It is often made worse by the measures employed to stave off the bubble such as what sadsack has described. And of course there is planning stupidity where you plonk an activity centre in the middle of nowhere where there is no infrastructure, no transport and no employment, such as in the case of Doncaster Hill, and then promote it as “a place to be”.

  9. Gerald says:

    Buying an apartment on Doncaster Hill is like buying a new car because you won’t get your money back once you have bought it.

Leave a Response

Currently you have JavaScript disabled. In order to post comments, please make sure JavaScript and Cookies are enabled, and reload the page. Click here for instructions on how to enable JavaScript in your browser.