Melbourne is on the verge of a comeback as investors start to return to the market following the federal election
Often joined at the hip with Sydney as one of the cities dictating the pace of the national market, Melbourne looks to be finally recovering from the recent decline that has affected Australia’s property scene. Its dwelling values increased by 0.2% for the first time since dropping from a peak in November 2017, according to CoreLogic’s Home Value Index for June 2019. Although rental performance weakened in the June 2019 quarter compared to the March quarter, the city still saw rents rise by 0.5%.
“While home buyers are still dominating the Melbourne property marketplace, investors are starting to come back following the result of the federal election,” says Antony Bucello, Victoria state manager at National Property Buyers.
Other factors that he believes have contributed to the resurgence of investor activity are “the lower interest rates and the loosening of lending rules from the governing bodies”.
In particular, first home buyers have their eyes on townhouses and villa units up to and around the $800,000 price point, as well as family homes. A good location has been key to competition for these types of properties.
“There is no doubt that buyer confidence is returning to the Melbourne property market. We are seeing more and more bidders at auctions – certainly more than the one or two we were seeing regularly just a few weeks back,” Bucello says.
“We are expecting the auction clearance rate to continue to increase – now all we need is for stock levels to increase to cater for the demand.”
One Melbourne city that has been encouraging investor activity is Frankston, which Mayor Michael O’Reilly is aiming to make “the epicentre of innovation, growth, industry, modernity and thinking”.
“Frankston City is well positioned to support growth into the future and offers attractive and competitive advantages for investment attraction,” O’Reilly said.
The city has quickly become a hotbed of entrepreneurial growth, with over 8,000 businesses making their base here. There are also many infrastructure projects in the works, including the proposed expansion of Frankston Hospital, the new Frankston station, and the redevelopment of Chisholm TAFE and Monash University.
“Now is the time to build on and leverage the catalyst infrastructure and investments that are already in place or committed to,” O’Reilly said.
SUBURB SPOTLIGHT
GOLDEN SQUARE:
A suburb in the Bendigo region, Golden Square looks like an attractive option for investors, as a property market with growth potential as well as low prices.
Both house and unit values recorded increases of around 8% over the year to June 2019. The median house price came in at under $350,000, whereas the unit price was just over $250,000. Both markets have had a history of strong growth since 2014.
Rental rates rose alongside prices during the same period, with the weekly averages for houses and units hitting $313 and $290 after boosts of 4.2% and 5.5%, respectively. Units in particular can offer excellent returns of 6.2% to investors.
GROWTH: Golden Square has had a history of strong growth over the past five years
AFFORDABILITY: Median values in this suburb make it ideal for buyers on a budget
