Density is inevitable 

The property market is inextricably complex – millions of permutations relating to supply and demand that don’t always have the expected outcome. 

For example, the supply of new apartment completions in Melbourne in 2024 is roughly one tenth of what it was back in 2014, yet sales are stagnant, even though our population has boomed by almost a million people since then. 

Surely the demand for new apartments will pick up at some point, and outstrip the severe undersupply? 

Especially given the long lead time from acquisition through planning to completion of new projects, in a development environment that has been crushed by rising construction costs and interest rates since COVID, to the extent where many developers are underwater and many builders have gone broke. 

It could take some time for the tide to turn and for apartment prices to catch up with construction costs and make new developments viable and profitable. 

The Victorian Government has taken some baby steps with the latest stamp duty savings for off the plan purchases, but this is unlikely to move the needle in a meaningful way. 

It is pretty clear that we are headed for a supply crunch of new housing, and Stonnington will be impacted. 

Like it or not, the only answer to increased housing supply in Stonnington is to go up. 

We are fortunate to have blanket heritage overlays protecting large swathes of Stonnington, which are likely to remain in place. 

However, with the government’s push for higher density housing along key inner city transport hubs like Toorak Village and High Street, Armadale, it’s only a matter of time before zoning laws are relaxed and medium and high-rise apartments are permitted and even encouraged along the growth corridors. 

You just have to look at High Street between Burke Road and Tooronga Road, which in the last 10 years has transformed from predominantly single level period homes to four level apartment blocks, and this is still General Residential Zoning – not even a Residential Growth Zone or Activity Centre zoning with much higher height limits. 

The upshot is, if you are fortunate to own a house in Stonnington, as density increases, so too will the scarcity of land. 

Land values should increase in parallel with population growth, as there is only a finite amount of developable land available. 

To take an extreme example, the per square meter rate of land in Monaco in 2022 was an eye watering $155,000AUD, and Hong Kong was $48,000AUD. 

Compare this to Malvern, where you can still buy an unrenovated house or block of land for between $5,000 – $6,000AUD per square meter. 

And while it may not have tax haven status, celebrity appeal, and views of the Mediterranean, it’s still a very desirable place to call home.