The fast-tracked approval of five residential highrise towers in Melbourne will damage the rental market even further, according to a leading economist.
Last week, the Victorian state government declared a ‘Super Tuesday’ after planning minister Matthew Guy approved the largest number of private residential permits made on one day.
Mr Guy says that the ‘Super Tuesday’ permits will drive new jobs and investment into Melbourne, with over 2,000 new apartments, $557 million in new construction work and up to 4,000 new construction jobs.
But with an already inflated vacancy rate, struggling economy and limited job opportunities, chief economist at Australian Property Monitors Dr Andrew Wilson said the approvals will take things from bad to worse.
“We’re certainly well into the realm of oversupply in the CBD apartment market. We saw the same thing happen in the late 1990s, but we had a large influx of international students rescue the market. We don’t have that kind of salvation on the cards this time," he said.
“Melbourne’s CBD is already in oversupply, and we’ve seen that reflected in both falling rents and falling sales prices. Instead of helping the issue, this decision will almost certainly make things worse.”
However, Dr Wilson believes the decision was more of a political move to boost employment figures.
“I believe these new approved highrise blocks are more of a political move to alleviate the high unemployment rate, which is above seven per cent at the moment. There’s an election at the end of this year, and 4,000 jobs is definitely a positive from that perspective,” he said.