Melbourne 'has a growing surplus of properties'

People looking for home loans or rented accommodation in Melbourne could see property prices fall dramatically, as there is a surplus of housing in the city.

According to research conducted by SQM, the metropolis has the highest vacancy rates within the rental sector of any state capital across the country, the Herald Sun reports.

Indeed, there are now 16,000 properties that are empty, which leaders at the research organisation believe is worrying.

Vacancy rates in the Victorian city grew by one per cent in the past month and rental costs across the area are likely to fall as a result. The problem, SQM managing director Louis Christopher added, could be made worse by further building projects that are nearing completion.

"It's a concern because there's still a lot of work in progress in Melbourne on apartment blocks yet to be completed," he was quoted as saying.

The recent Demographia International Housing Affordability Survey indicated that Australian property is among the most expensive in the world, with only houses in Hong Kong costing more.

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