Mirvac launches city rental project as perfect housing storm brews

The property developer, led by Susan Lloyd-Hurwitz, believes the looming residential shortage will favour stronger operators.

Development heavyweight Mirvac has flung open the doors of its first build to rent building in Melbourne amid hopes that the new type of apartments will help address the housing crisis.

Despite the cooling housing market, young Australians are facing an affordability crunch as interest rates rise and the developer believes the flats will give more people locked out of the market a home.

The LIV Munro complex has units renting from between $900 and $1,300 per week, and the 490 unit complex adds to the supply at a time when very few build to sell apartments are coming out of the ground.

Mirvac chief executive Susan Lloyd-Hurwitz says that about 60 people have already moved in and conditions are supportive, with vacancy in the area at about 1.3 per cent and rental growth running at 10 per cent annually.

“We’ve got population growth and foreign students turned back on and we’ve got very, very low housing supply,” she said.

The company has pioneered build to rent in the listed sector, but is up against giant US firms and some private developers.

“It certainly does help provide a different secure form of rental housing – and we think BTR is an essential part of all the housing typologies that we need in this country,” Ms Lloyd-Hurwitz said, with affordable rentals easy to build into new schemes.

Ms Lloyd-Hurwitz sees the new apartments as “completely revolutionising” how people rent with security of tenure, no bond, and a strong sense of community.

Traditional build to sell units have been slugged with the broader market slowing. Ms Lloyd-Hurwitz said demand, particularly in the first homebuyer market, had fallen from the stimulus-induced peaks during Covid, with more pain to hit next year.

“I think we will see some impact on consumers around March to September next year when there’s that big wave of very low fixed rate mortgages, flipping over into variable. We’re still seeing strong consumer confidence coming into Christmas,” she said.

But the developer said that projects focused on domestic owner occupiers are selling well. Mirvac is active in Brisbane and in Sydney’s Green Square has lifted prices twice, which the property chief said showed the “absolute shortage” of quality apartments. Longer term, the company sees conditions for residential projects as supportive.

“Once you get through the end of the interest rate rise cycle, at the end of the inflation cycle, we will have the perfect storm of very, very low supply – the lowest post-GFC. Very strong immigration will be the catalyst in 195,000 people a year,” Ms Lloyd-Hurwitz said.

Mirvac remains bullish. “We’re going to have this chronic under supply which is very supportive for a well capitalised, high quality, reputation, reputation solid developer.”