Melbourne Property Market Update October 2017

Melbourne’s Median House price hits record high of $826,000 Apr 2017

Consistency continues to define the Melbourne property market’s performance and with its strong economy, Melbourne remains one of the steadiest markets in the country showing its resilience to other market influences

According to NAB Housing Market Report–Victoria, their view is ‘despite the risks for new apartment supply and prudential tightening, NAB forecast another good year for Melbourne property prices in 2017

House prices are forecast to rise 10.8% and unit price forecast to rise by 5%, excellent result in a market in which Sydney values have steadied

According to CoreLogic, Melbourne home values are showing a substantial rise, increasing by 15.9% over the 12 months to March 2017

Our own research contradicts media reports about over supply primarily based on incredibly strong population growth and insatiable demand for housing supply throughout most Melbourne suburbs (inner and outer rings) to own or rent

Continued and planned population growth has increased the demand for supply of new dwellings up to 63,000 per annum for the next 35 years to accommodate for the planned 10.1 million ‘Melbournites’

What the media does not report is that the much written about over supply in Melbourne is located in and around the CBD, Southbank and Docklands. However, vacancy rates are a clear thermometer for oversupply and currently the vacancy rates in these locations remain under 2% with waiting lists in most of the new buildings, with a higher vacancy rate in older buildings

In the middle and outer ring suburbs (3 – 15km) from the CBD current statistics and future forecast demonstrate no oversupply in these areas. The resulting population growth has been able to absorb much of the new supply in the apartment market

Further to this what is not reported is that House and Land supply is unable to keep up with demand which has outgrown supply in the majority of locations. Land Registration is now 12 months to 18 months out, meaning a purchaser has to wait this time frame before they can get title and start to build. You may also not be aware that people either are camping overnight outside an estate with a new release or having to submit their names into a ballot in order to have a ‘shot’ at securing a block for themselves. House and Land in outer Melbourne is also being sought out by Investors who have identified the rise in demand and are wanting to take advantage of the potential capital growth opportunity in Master Planned Estates on the outskirts of Melbourne

Melbourne’s demand fundamentals are solid with Victoria seeing the fastest rate of population growth in the country on the back of a strong performing economy and a sound high employment rate the NAB reports. The Melbourne economy is creating around 72,786 jobs with most of them full-time positions which equates to almost half the new jobs in the country

NAB Residential Property Survey’s read on market sentiment is that it jumped in the first quarter of 2017 to its highest level since the Survey began. Additionally, lower vacancy rates and solid auction clearance rates suggest that oversupply is not an issue for the broader market

If your preference lies in investing in the CBD, Southbank or Docklands you will most likely achieve a sound rental yield (example 5% on a new build one bed) but what you will find is that the banks will in all likelihood undervalue the apartment and you will probably struggle to achieve capital growth. The adverse is likely outside of these locations where bank valuations are closer to the dollar, rental yields around half a percent lower but the potential for capital growth stronger. Wisely choose your location to suit your investment strategy; that means it does not have to be in your postal code vicinity

Did you know (according to CoreLogic Sept 2017 study) that 47.3% of Melbourne properties doubled in value over the last 10 years!

Clearly demonstrating that a small percentage of property is Investment Grade property. Remove emotion and undertake due diligence or work with a professional to guide you. This is one investment you would want to get right from the start, you would agree, which will help you determine if you are “buying a property, or are you investing?”

Melbourne has been the most consistently performing property market over the last two decades and is likely retain that title in 2017, in which once again we’re likely to see the Melbourne property market outperform most other capital cities

“Our take on the tightening of lending to investors, as a direct result of APRA interference, will discourage a percent of investors coming into the market thus widening the gap on supply of much needed Rental Properties. Demand for rental accommodation will increase further (due to affordability to purchase + population growth) which in our opinion will be inflationary driving up the rental yield … your investment opportunity!”

“We also take a calculated analysis in concluding that the banks will soon once again resume towards ‘normal’ lending practices with signs of reduction in Interest Only interest rates starting to trickle back into the market and at competitive rates too”

View further information on “Why Invest in Melbourne” here and here

Your conclusion :

• Investing in the right property continues to make investment sense in helping you grow and secure some wealth
  • Where else can you invest just 10% yet achieve Capital Growth on 100% of the Investment
  • Where a tenant and the tax man contribute significantly towards your own financial planning
  • In an asset class which over a 7 – 10 year period is classed as a ‘low risk’ investment profile
  • From which the monies you invest could give you a *30% to *45% return on investment every year
    • *will vary by property and your personal financial circumstances
  • Supply and Demand
    • When demand continues to override supply, the price of the commodity under demand continues to grow in value
    • The continual rise in demand emanates purely out of ongoing and planned Population Growth in Melbourne and Victoria
  • If you do not invest in property and you know you will not have sufficient funds at the time you prefer to retire in, what is your alternative?
  • Property in Capital Cities mostly tends to double in value every 7 – 10 years it is widely reported. So what if this slows down to every 15 years … your return on investment is still significant and you will be better off financially than if you did nothing
  • For every year you put off investing facts are :
    • You would have paid away *$6 to $10k to the tax man anyway, which could have gone towards your own investment strategy
    • You will have lost out on rental income
    • You further delay the Power of Compounding Returns thus weakening your end financial position
    • And you are probably leaving yourself in the same financial position you are in and thus going backwards due to inflation

Editor’s Note :

As stated above not all property lends itself to being an astute investment and one would want to undertake market research and due diligence in coming to an informed investment decision

Or take advantage of those with experience in the industry who can work with you to assist you in coming to your own informed decision. Professional services such as these can save you Hundreds and Thousands of Dollars over the life of your investment by helping you get a very important decision ‘right’ upfront

I enjoyed 15 years’ experience as a financial planner, and a further 10 years’ experience in this industry where my role is to understand property markets, identify areas with sound fundamentals and work with you putting you infront of a selection of ‘best fit’ properties which will match your own financial planning goals. We also provide you with market research and information to help you understand the fundamentals in those locations better to support why we have recommended those properties

Your role is to undertake your own due diligence against our research so that you can come to your own informed decision. We guarantee to save you time, stress and money working with us than by trying to go it alone

If you do not invest in property, knowing you will not have sufficient funds at the time you prefer to retire in, what is your alternative?