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Mr Teplin said it was bad news for buyers looking for more affordable options in high-end suburbs, which had been a growing segment of the market early this year.
Glenarm Square in Glen Iris recently sold the last of its 120 homes, with sales driven by first-home buyers enticed by the project’s two-bedroom apartments that cost $700,000-$800,000 – far below the $1.2m entry level house price for the suburb.
“The buyers are young families with one child, or expecting, and needing to be in the area for work or their family,” Mr Teplin said.
The Walmer project in Abbotsford is still offering a similar option, with buyers able to buy a new apartment for $800,000-$900,000 – far below the $1.1m of an equivalent-sized entry-level cottage.
It is now also 65 per cent sold, with the build’s main structure recently topped out and numerous buyers seeking to combine apartments within it.
But Mr Teplin warned options for these buyers in sought-after suburbs were likely to shrink with the number of new units being approved around the city well below average in recent years, and development costs high enough it was getting harder for developers to produce affordable options in high-priced postcodes.