Reasons to invest in Melbourne rental property
Any Melbourne buyers' agent will no doubt tell you that rental property is a particularly hot purchase at the moment. Existing investors are already benefiting from a combination of positive factors that in many cases mean their properties are delivering strong returns.
If you are still in two minds as to whether a Melbourne rental property could be right for you, then a closer look at some of the latest statistics might just help you come to a final decision. The city's property market is buoyant at the moment, making now a great time to approach a property buyers' agent and make the most of current conditions.
Vacancy rates are low
One key piece of information for any investor is vacancy rates. They'll show you how many rental properties in a particular area are without tenants, giving you a better indication of how much demand there is for real estate.
Rental rates in the city have recorded a rise of 2 per cent.
SQM Research offers monthly data for all the major capital cities. It revealed that in March, the national vacancy rate stood at 2.3 per cent, whereas in Melbourne, just 1.9 per cent of homes were not rented out. This shows that the Victorian capital is in higher demand – good news if you've recently purchased an investment property.
It's also essential to take a historic look at data. Comparing these figures to the same time last year, it becomes apparent that demand for homes in Melbourne has increased, as the March 2015 vacancy rate registered at 2.1 per cent.
The number of people in search of rental property will vary depending on which part of the city you're in, so don't just take these statistics at face value. Make sure you weigh up the merits of the particular region you're looking at and gather all the necessary facts and figures – something a property agent should be able to lend a hand with.
Rental costs are rising
There's further positivity for buyers of Melbourne rental property, as figures show rental costs are rising across the city. CoreLogic RP Data recently warned that annual rental rate increases are currently at their slowest since 1996, but Melbourne is leading the pack.
Over the course of the past year, rental rates in the city have recorded a rise of 2 per cent. In second place was Sydney with a 1.4 per cent increase, showing just how strong these results are in a national context. Costs are presently at a record high in Melbourne, despite being lower than their recent peaks in every other capital with the exception of Sydney.
Melbourne exceeded the national average by posting a 9.6 per cent rise in property prices.
As an investor, you need to know that not only is your property going to be profitable now, but that this success can be maintained well into the future. Looking at yearly rental cost rises can be a strong indicator of this, along with any information your Melbourne buyers' agent may be able to provide.
Property prices are moving in the right direction
Of course, it's not only rental income you have the potential to make money from, but also the increasing value of the property you've bought. When it comes to selling the real estate, you need to be sure you've made sufficient capital gains for the investment to have been a success.
There's no shortage of property price information out there, including a leading measure from the Australian Bureau of Statistics. The group regularly releases its Residential Property Price Index, which shows that during the December quarter, the weighted average of the eight capitals increased 8.7 per cent.
Once again, Melbourne exceeded the national average by posting a 9.6 per cent rise in property prices compared to the previous year. On a quarterly basis, the city's values were up 1.6 per cent.
It's important you enter the market with some sort of concept of price, which is something some buyers struggle with. Research from Commonwealth Bank recently revealed that as many as half of residential property buyers overestimate the median dwelling price in their capital city.
Dan Huggins, Executive General Manager of Home Buying at Commonwealth Bank, said: "Discussing the local property market is a national pastime but these results show that, even for those actively looking to buy a property, perception can be different to reality."
This is why it can be so beneficial to have a property agent to hand. No matter what your motivations are for buying real estate, the team at Cohen Handler will be able to guide you through the process and help you achieve your property goals.
We're on hand to discuss your ambitions and find a strategy that will help you move in the right direction – so why not give us a call? Cohen Handler prides itself on delivering an innovative yet simple solution that will ensure you buy the right real estate for your needs.