Despite investor interest taking a hit as a result of tightened lending criteria, Melbourne has continued to sustain increases in dwelling prices.
“Investors are still a stronger part of the Melbourne market than they ever have been, but they haven’t been as big a part of the market as they were in NSW,” explains Angie Zigomanis, senior manager for residential property at BIS Oxford Economics.
Concessions from the state government have also helped drive buyer demand. However, with build completions expected to peak in the next year, buyers should expect to see a slowdown.
“[The Melbourne market] won’t be that strong over the next 12 months. The weaker investor demand will cause the market to soften, so we don’t necessarily see strong growth coming through,” Zigomanis says.
“It may not necessarily experience the declines that Sydney’s had, [but] I think Melbourne is starting to run out of steam as well. You can’t keep going at [a growth rate of] 10% per annum forever.”
The findings from CoreLogic’s October 2017 Hedonic Home Value Index support this, showing the slowest increase in dwelling values in over a year.
The report indicates that booming population growth as a result of record migration inflows, high levels of job creation and more reasonable property prices have given Melbourne an advantage over Sydney.
Nonetheless, investors may need to be careful. With Melbourne’s average rental yield already being the lowest among the capital cities, market movements that affect capital gains could make investing here risky in the long run.
Fewer listings in the countryside
Beyond the metro, the regional areas of Victoria are recording positive growth, albeit at a slower pace than in the city. In some areas, the number of listings has gone down over a 12-month period, according to Propertyology.
“A significant reduction in the number of properties for sale now compared to a year ago is evident in Bass Coast (-38%), Murrindindi (-32%), South Gippsland (-25%), Benalla (-23%), and East Gippsland (-22%),” says Simon Pressley, Propertyology’s managing director.
Suburbs like Wangaratta, Baw Baw and Latrobe also saw the average time on market for properties slip by around 30%.
With high-rise buildings flooding Melbourne’s inner city, and apartment oversupply being a strong concern in the metro for the year ahead, focusing on balancing demand and supply could be a smart move to maintain competition and growth in the countryside when the state property market starts declining.
SUBURB TO WATCH
WANGARATTA:
Over the 12 months to November 2017, Wangaratta saw apartments outperform houses in terms of growth.
The unit market recorded a 10.7% increase in prices, as opposed to 1.8% in the house market. Nonetheless, both types of properties are very affordable, with median prices under $300,000.
Wangaratta’s signifi cant distance from the metro certainly contributes to its affordability. It is situated at the junction of Ovens River and King River. It is also considered the administrative centre of the Wangaratta LGA, and is one of the regional suburbs highlighted for sustaining demand and reporting a fall in average time on market.
Wangaratta is known for its food and wine industry. There are also several schools in the area, including the Goulburn Ovens Institute of TAFE and Wangaratta High School.
Schools: There are several schools and tertiary institutions in Wangaratta, including Charles Sturt University
Affordability: Both houses and units have low median values, at $286,315 and $217,783 respectively
