The 2017 Melbourne property investment price map shows an increase of activity 10 to 15 kilometres east of town. There’s even been a couple of suburbs moving beyond this band suggesting the wave is expanding. While the drop in manufacturing has hit Victoria’s economy, the construction industry has helped pick up the slack and this is bringing confidence back and buyers in the median range will continue to seek solid real estate.
In the mid-range in Melbourne to the west and to the north, you can still find investment property at $400,000 to $500,000. We think that’s a good buy-in for investors as that’s where the demand will continue to rise, because it’s still in catch-up mode compared to those eastern and south-eastern suburban regions that’ve been very popular and have had strong price growth over the past two or three years.
Property investors shouldn’t head too far out in Melbourne, purchasers in the north need to stay on the city side of Reservoir, while those to the west must remain east of Point Cook.
There is still good investor upside in the middle-band suburbs to the west and the north, but you’ve really got to go further out to the east [for affordability]. We’re seeing a lot of growth in some of those south-eastern suburbs now, moving down into Keysborough, Chelsea and those areas.
Melbourne’s property investment market is reasonably balanced at present with activity across most price brackets, regions and buyer types.
There are some very individual factors that have driven some suburban growth models, and that’s the ethnic enclaves – Glen Waverley, Mount Waverley, Northbourne and Doncaster East. These areas have been a significant focus for Chinese buyers and that’s an energy on its own, which tends to move outside the normal cycle.
Melbourne property investor growth moves from the CBD out, but it’s not a regular radiation. The inner city is strong, but the really strong capital growth is in more blue-chip prestigious suburbs in the next ring out in the inner suburbs. Typically that’s Hawthorn and Kew to the east, Toorak, Malvern, Armadale to the southeast, and Brighton down in the bay.
Growth is elongated towards the east and bayside. It’s not as strong in the north or west.
This growth wave model will mostly continue, although it’s changing shape somewhat.
After this cycle, which has been very strong in the east and southeast, the next cycle may end up being one where the north gets more of a look-in, and the west.
The Melbourne property market is peaking after a strong three years of gains. However, there are two possible areas of opportunity, firstly, the property markets that have been heavily influenced by the Chinese and Australian-Chinese communities. They’ve had phenomenal growth over the past six to 12 months – that’s Balwyn, Balwyn North, Templestowe and Glen Waverley.
The other tranche is more in your outer eastern suburbs and these include Ferntree Gully, Ringwood, Mooroolbark and Rowville. We suspect this is a case of that ripple effect. If you can’t afford Glen Waverley, you go to a couple more suburbs out, for example to Rowville. There’s also quite good, established infrastructure out there, although you are getting quite a way from the CBD.
The market in general is probably going to level off and we may even see some moderate softening as the cycle downturns.
As for the much-touted inner-city unit oversupply, overseas investors are a dominant force but seem happy as long-term investors.
They hold onto them for at least five to seven years. As long as there’s not a rush for the exit, so to speak, in terms of cashing in the apartment then we should be okay.
There was some prediction that it was going to bring down the entire market, which hasn’t occurred. The natural market forces are slowing down the market now so vendor’s expectations are a little bit out of whack … Property markets are cyclical. It’s had a good run for two and a half to three years, so it’s time for things to cool off a little bit.
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