Melbourne Property Investment Overview

Melbourne's investment property market has certainly moderated over the last few months, however, figures from the Australian Bureau of Statistics show that Victoria has been leading the way in dwelling approvals.

Melbourne’s investment property prices are expected to remain firm as the supply of new dwellings fails to keep up with market demand.

A number of factors point towards Melbourne as having the potential to be among the leaders in the next upswing in the Australian residential property market.

Based on the population and demographic projections prepared by the Australian Bureau of Statistics (ABS), the Housing Industry Australia (HIA) estimates that Victoria will be home to an additional 405,100 households by 2020. In order to satisfy demographic demand, the stock of dwellings in Victoria will need to grow by approximately 45,000 homes per year through to 2020. This means Victoria needs to build 13,000 (3.3 per cent) more homes in the remaining nine years to 2020 than were built over the last nine years.

Melbourne’s residential property prices are expected to remain firm as the supply of new dwellings fails to keep up with market demand.

The Melbourne property market has seen rental vacancies fall to their lowest levels in 25 years and are expected to further tighten in the year ahead as underlying housing demand continues to outstrip dwelling completions. Melbourne's rental vacancy rate has fallen to 1 percent for the first time on record. The vacancy crisis is even worse within a 4km radius of central Melbourne, with just 0.5 percent of rental homes in that zone vacant.

Melbourne continues to experience strong population growth. According to CommSec building starts are at historically high levels and current market conditions should provide opportunities for shrewd investors. Positive underlying economic and property market fundamentals in Melbourne should support on-going resilience in house prices in the near term and see prices grind higher in 2012-2013.

Investor finance approvals are up and according to a recent report from the ANZ, it appears that investors have taken up where first home buyer activity has declined.

Most analysts agree the Melbourne property market has moved to a much more stable footing, which is throwing up good opportunities for investors with 2012 - 2013 seeing a more balanced market in terms of both activity levels and price growth. In other words, it's a good time to invest.

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