Good news for investors! Melbourne’s rental market is strong!
While most data shows Melbourne property prices fell over 2018, data from the Real Estate Institute of Victoria (REIV) found the city’s median house sale price actually increased by 1.4%, and the unit median by 1.8%. How can this be? Well, these figures only take into account properties sold over the period rather than the estimated value of all properties in the market. Prices were pushed up, according to the REIV, by growth in Melbourne’s outer ring and regional Victoria. Mt Martha recorded the biggest growth of 12.3% to reach a $1,100,500 median.
No matter how you look at the figures, price growth has clearly moderated recently in Melbourne, but there is good news for investors, with the rental market on its way up. New data from Domain found weekly asking prices for houses have risen to record levels, rising 2.3% over the December quarter to hit $440. Unit rents have plateaued, remaining at $410 per week. The research found the city’s inner south was the best performing region, with asking prices rising by $50 per week and $20 per week for houses and units respectively. The strong rents come in a climate of low vacancy rates, with Melbourne’s currently sitting at 2.2% compared to 3.6% in Sydney, according to SQM Research.
If you’re a client, rest assured you will benefit from this expansion of Property Mavens. It will mean we will have a bigger team of buyers’ and vendors’ agents to service your requirements, ensuring we continue to provide only the best expert advice and practical solutions for each and every valued client.
The changes to tenancy laws in Victoria that were passed last year and are set to be introduced in the middle of next year may also lead to further rental price growth. Designed to give tenants more rights, these reforms appear to give some investors less control over their asset, so we anticipate it may lead to some exiting the market. A tightening of supply with continued demand would lead to rental hikes. If the ALP is elected at the Federal Election, expected to held in May this year, and negative gearing is removed as planned, rents will likely strengthen even further, as this policy will also push some investors out of the market and reduce the availability of rental stock.
While it is a buyers’ market amidst a current slowdown, buyers can’t take for granted snagging a bargain, with the best properties still being snapped up, and for good prices. You don’t want to miss out, but you don’t want to pay too much. Big prices are still being paid and records being set, including the $52.5 million sale of Malvern’s Stonington Mansion at 36 Glenferrie Road last year, that set a record sale price for Victoria. Many suburbs also saw new sale records set in 2018, including Moonee Ponds, Essendon, Glen Iris and Port Melbourne. Meanwhile, realestate.com.au data shows Middle Park is the most searched for suburb in Australia, with Red Hill coming in at 10th place, with both having double-digit price growth over the past 12 months.
If you want help finding an investment-grade home or investment property in Melbourne or elsewhere in Victoria in the current market, contact us for some advice today.
What factors influence the performance of the property market?
With so much information about property at our fingertips, particularly data, there is constant debate and commentary about the performance of the property market. Are prices going up? Are they going down? What will happen to prices next year, or the year after?
Supply and demand – This is basic economics. If demand is high and supply is low prices will theoretically rise, while conversely prices will fall if demand is low and supply is high. The same logic applies for tenant demand and rental supply, and hence rental rates. This is the key fundamental for a market’s performance, with the below factors mainly impacting upon supply and demand to affect performance.
Government policy – If, for example, the ALP abolishes negative gearing following a win at the next election, demand for property will likely fall, which will impact upon both prices and rents. Governments can also have policies to increase supply, which also impacts the market’s performance.
Prices and affordability. This can impact demand by drawing buyers in (if prices are affordable) or forcing them out (if they’re too high).
Growth drivers. Employment opportunities, infrastructure development and proximity to local amenity, such as hospitals, schools and public transport can all bring people to an area and drive up demand.
Population growth. If more people are moving to an area there is greater demand for homes, which usually means higher prices and rents.
Property type. Drilling down to a more local level, if a particular type of property is in demand in an area as it’s popular with the local demographic, it can experience greater growth, especially if its scarce.
A property’s attributes. We check against 57 of them when buying to ensure a property will be in demand if and when the time comes to resell.
Interest rates. These can impact upon demand. If rates rise demand can fall and vice versa.
Employment. If lots of people have jobs, there is more money around and a greater ability to secure a loan and buy a property, which equals greater demand. If unemployment is high, the reverse is true.
Global affairs. If there is instability around the globe it can impact confidence, which means buyers won’t purchase as readily and demand will slow.
For expert advice on where and what you should buy in the current market, contact us today for an obligation-free discussion.
Why do you need a buyer's agent?
Neil and Lena needed help buying a low-maintenance investment-grade home in Ballarat to live in initially, and then renovate to flip in order to upgrade in the future, so they engaged our Ballarat buyers’ agent services to help.
The competition was hot, hot, hot for this value-add character home we identified for Neil and Lena in a highly sought after suburb in Ballarat
It was one of those awful “best and final offer” scenarios, which lacks transparency and is a buyer’s worst nightmare. By understanding our clients brief, market conditions and knowing how to carefully price the property while also allowing for the variable of competition, we secured it for our clients in spite of our offer not being an unconditional one. Needless to say, our clients were thrilled!
If you want help to identify an investment grade property like this one, whether it’s a family home or an investment property, click here to book a time with us to discuss your requirements. It’s 100% obligation free
Located interstate, Daniel and Sue needed expert help to buy a high-performing property in Melbourne, and engaged the help of Property Mavens.
Their objective was to find a property which represented a balance of yield and growth in line with their budget, and we delivered!
After searching through 9 specific suburbs situated within 5 to 8 kilometres of the Melbourne CBD in the western to northern corridors we found the perfect property in Thornbury for our clients, located in a popular residential street within walking distance of transport and shops. We purchased the property on behalf of Daniel and Sue in an off-market transaction, and within 3 years it had grown in value by more than 22.3% against the market that performed at 11% by comparison.
If you want similar results click here to book a time with us to discuss your requirements. It’s 100% obligation and cost 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.