We’ve seen property prices in Melbourne rise significantly in recent years, but the market has now stabilised, with one of the key markers being falling clearance rates. Melbourne clearance rates have been sitting at between 60% and 70% so far this year, according to Domain Group data, but it does vary on a suburb-by-suburb basis.
Despite a slowdown, price growth is still positive, with CoreLogic figures showing over the past year Melbourne’s market has grown by just over 5%, with the median value now just over $720,000. While this level of growth is the second strongest in Australia – second to Hobart’s 13% - over the past quarter there has been a slight fall in dwelling values of 0.5%. But putting this in context, six of the eight capital cities recorded a fall, with only Hobart (with 3.4% growth) and Brisbane (which remained the same) the exceptions to the rule.
Interestingly, CoreLogic data shows units are outperforming houses in Melbourne, with unit values up 6.6% over the past year, while houses are up only 4.9%. This trend is likely due to the relatively affordability – and location, being closer to the city - of the housing type.
Moderating growth is a great thing for buyers, as it provides an opportunity to get in at a lower price before the market rises again. If you’re thinking about entering the market and you want advice about what and where you should buy for the best results, contact us for some advice today.
The Melbourne market won’t crash
As prices have moderated, we have seen a few doomsayers come out of the woodwork, predicting prices will fall by a little or a lot.
Having been in the industry for a 22 years, I’ve seen the market go through many cycles, and I’m confident it won’t crash. The property market cycle goes through predictable stages over and over each time – there’s a boom, then a slowdown, where prices moderate, before the recovery takes hold, and the cycle continues again. While there have been factors leading to a slowdown in the market, such as the APRA effect, we’re also clearly at the normal phase of the market where prices are moderating after experiencing strong growth.
But the stronger case for why prices won’t crash in Melbourne – or Australia - lies in the fundamentals. It’s a simple case of immigration, and supply and demand. As long as the immigration remains strong, demand will continue. The HIA states that we need 250,000 homes built per year to keep up with demand. If developers provide the right mix of villas and townhouses that will satisfy much of that demand – it will accommodate baby boomers who are downsizing, and in turn free up their homes for the younger demographic.
The likelihood of a substantial shift in the market could occur if interest rates rapidly increased, at the same time as unemployment rising and immigration slowing down, but this scenario is extremely unlikely to play out.
If you’re looking for a property with strong growth potential, Property Mavens can help you make the right decision. Contact us today for an obligation-free discussion.
Why do you need a buyers’ agent ?
Careful selection of property is always paramount, and while we’re confident the market will continue to remain stable, it’s more important than ever to buy the right property, as these are the ones that will always retain their value, and continue to grow.
This is where Property Mavens can help – we help our clients identify investment-grade properties that will deliver results for them in the future – that is, by experiencing capital growth.
As an example, one of our clients purchased two properties utilising our services over the past three years. That 2nd property has had a $110,000 increase in value, or 22% capital growth in 12 months. The results speak for themselves.
As more stock comes onto the market in Melbourne, it will become harder to select the right property, with the right fundamentals, for the right price, in the right suburb to maximise growth. As such, our job will become even more important, and it will be even more imperative for buyers to seek the help of experts.
If you would like help with purchasing an investment-grade property like these, click here to book a time with us to discuss your requirements. It’s 100% obligation free.
A buyer from Perth, Debbie, came looking for our help to find and purchase a property for her SMSF that would generate capital growth over time, while also providing a good rental income. Since she was interstate, Debbie needed a buyers’ advocate she could trust to source the right investment property in Melbourne.
We met the brief, and the outcome speaks volumes. The property we purchased on Debbie’s behalf, in Melbourne’s Newport grew in value by 36.7% in 21 months (more than double the Melbourne average for the same period), increasing from the purchase price of $567,000 in April 2015 to $725,000 in January 2017. We negotiated a price below our client’s budget, securing the property before auction against strong competition. While the property was sold vacant, a good tenant moved in within two weeks of settlement due to the clauses we thought to include in the contract.
If you want to purchase and investment grade home like this one, click here to book a time with us to discuss your requirements. It’s 100% obligation free.
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If you want to invest or buy the right home for your budget, click here to book a time, or call us for a chat about securing your financial independence.