How is Melbourne changing?
For many years, Melbourne has been a central hub for people looking to invest in property.
Is that likely to change? No. In fact, business forecasts project that the city will actually overtake Sydney as the biggest Australian city in the future. That can only be good news for property investors in the Victorian capital.
What shape is the current Melbourne market?
Melbourne is still a major economic centre in the country, and as activity continues to flourish all around the region, the need for rental properties will grow – or at the very least stay consistent. A BIS Shrapnel report made in conjunction with QBE found that in the 12 months prior to June 2015, the median house price increased by 28 per cent to $734,300. That’s a significant difference when compared to Sydney which clocked in at $1,034,100. So, property in Melbourne is more affordable than the biggest city in Australia.
The current median house price in the city is also favourable, and is projected to continue to increase for a few years before falling again.
The current median house price in the city is also favourable, and is projected to continue to increase for a few years before falling again. However predicting how great that fall will be is difficult, and the market could end up well above the current position.
“The potential for continued solid growth in Melbourne’s median house price is limited given the potential for oversupply,” said Angie Zigomanis, BIS Shrapnel senior manager.
While some experts believe that an excess of available dwellings will lead to an increased vacancy rate in rental property, McCrindle Research suggests that Melbourne could reach a population of nine million by the year 2056 and overtake Sydney as the largest city in Australia. The decrease in new buildings around the region has the potential to ensure that as the population growth continues upward in leaps and bounds, the demand for rental property, and therefore investment, will remain high.
Expert advice can be found in the form of a buyer’s agent from Cohen Handler. As you research and find more and more properties that are viable, it will help to have an expert voice guiding you on which areas are growing and which ones could be on their way down.
The Victorian Department of Environment, Land, Water and Planning has prepared a report on where Melbourne is expected to be by 2030. In today’s environment there are more than 200 different cultures that call Melbourne home, and the burgeoning Asian market and a focus on building relationships with businesses in that region will only make Melbourne a more attractive city. The Melbourne City Council Plan 2013-17 reports that 38 per cent of people in the inner suburbs speak a language other than English, so diversity is a clear selling point.
How will this affect property investment?
A greater demand from people moving into the city, either from a domestic or international location, will mean that an increased demand for excellent available rentals will be required. When demand is high, the prices for rental properties will increase and thus the potential yield will rise.
Even better news for investors is the fact that the cash rate is still at the historically low 2 per cent. If you are working with a mortgage broker then the favourable market conditions of today will mean better returns in the future.
Taking control of your finances and expanding your property portfolio could leave you in a fantastic financial position and allow you to retire while sitting on a large, and growing, nest egg. Achieving that will require the right moves to be made, however, and that’s where a specialist property agent from Cohen Handler can be of use. Get in touch today to see how.