Melbourne: The place to be in 2016?
It's looking more and more likely that, after years of Sydney domination, Melbourne will be the site of the strongest property value growth in Australia in 2016. With median prices rising around 20 per cent over the last five years, less than half of what was seen in Sydney over the same period according to the Commonwealth Bank, the Victorian capital is forecast to move ahead in the coming months.
So what does that mean for real estate buyers in Melbourne? Should you speak to your buyer's agent about accelerating your plans to purchase a new home or investment property, or perhaps place them on hold until there is a little more certainty in the new year?
The Victorian capital is forecast to steamroll past Sydney in the coming months.
How is Melbourne's market right now?
At the close of last year, Melbourne's median price remained a distant second to Sydney according to CoreLogic RP Data, at $602,500. Where the country's two largest cities were much closer, however, was in the amount of actual growth across the entire year, with Melbourne at 11.8 per cent alongside Sydney's 12.8 per cent.
Compare that to the same time the previous year. At the end of 2014, Sydney had experienced eye-watering growth over the previous 18 months of 31.2 per cent, while Melbourne managed just 17.6 percent – still very strong, but nowhere near the staggering values of the larger city.
Looking at this data, it's easy to see the rate at which median property prices are rising is slipping in both cities, but the downward incline in Sydney is much steeper. It's this less violent swing in Melbourne that is leading industry insiders to predict a better year for Melbourne than Sydney.
How much better?
Obviously it's a little early to call just how much private house sales will be impacted by the property cycle in 2016, however the consensus seems to be that Melbourne value growth will edge ahead. A study from SQM Research in October estimated that the cooling of Sydney's booming market will intensify in the coming year, dipping to median house price growth of between 4 and 9 per cent.
Those with investment property should continue to reap good income from their portfolio.
Meanwhile, SQM expects Melbourne house prices to hold somewhere between 8 and 13 per cent, remaining reasonably constant in comparison with 2015. Speaking about his findings, SQM's managing director Louis Christopher noted that homeowners shouldn't be too concerned – falling growth is still growth.
"We do not believe the market will record a fall in prices for the year. There might be one quarter perhaps where Sydney records a marginal decline. But that should be it," Mr Christopher said.
Is it best to invest?
With median housing prices continuing to grow in Melbourne, perhaps 2016 is the time to speak to your buyer's agent about investment property opportunities. The somewhat restrictive cost of buying a home likely means people are renting for longer, as evidenced by the 3 per cent vacancy rate in the city according to the Real Estate Institute of Victoria.
Discussing the Melbourne rental market, Domain Group senior economist Andrew Wilson said that figure was unlikely to see much change in the immediate future, as there are no indications that housing supply will catch up to demand. That means competition for rental property should remain strong in the city, so those with investment property will continue to reap good income from their portfolios.
Whether you're looking to purchase a new home for yourself, or to bolster your present investment slate, an appointment with a Cohen Handler buyer's agent should be your first port of call. They can tap into their vast real estate network, and make you a part of Melbourne's strong property market in 2016.