The combination of low interest rates and the expectation of further rate cuts in coming months has many experts predicting that residential real estate will continue to be an attractive investment opportunity in 2015.
Traditionally, capital cities across Australia have provided both investors and owner-occupiers with solid returns, and many have experienced good residential growth over the past few years.
One such capital city is Melbourne, which is the country’s top performer after Sydney in terms of year-on-year growth. Here’s a snapshot of the current state of the Melbourne property market, for anyone interested in selling or buying.
After all, knowing when the timing is right to sell a property or make a purchase is vital, and it can be very difficult. Doing your market research can help you get the timing right, and in the case of buying, can help make sure you’re purchasing in the right area for maximum growth.
Melbourne property market growth
According to the Home Value Index report by CoreLogic RP Data, released in December, Melbourne recorded year-on-year average growth in home values of 7.8% in 2014. Melbourne came in ahead of all other capital cities behind the hot Sydney market, and was also the only city apart from Sydney to have recorded annual growth of more than 5.3%.
The increase in home values has been extremely beneficial for sellers, although it has seen many first homebuyers forced out of the market. There may be some good news for buyers however, with industry experts predicting the strong growth seen in many Melbourne suburbs will begin to soften during 2015.
The facts and figures
The Melbourne property market is competitive, with both a fall in the time properties are on the market before sale, and consistently high auction clearance rates. Here are some key figures:
• Melbourne has a median house price of $615,000, with a median rental rate of $446 (gross rental yield 3.2%).
• Melbourne has a median unit price of $472,000, with a median rental rate of $397 and a gross rental yield of 4.1%.
Given the competitiveness of the market, if you’re a buyer, knowing which suburbs you would like to purchase in is essential to ensure you don’t miss out on the prime properties in these locations.
So what suburbs are popular?
The recently released realestate.com.au Top Sellers Market report highlights the suburbs of Albert Park, Ringwood North, East Melbourne, Montmorency and Carlton North as being the most sought after in Melbourne – taking out the top five most searched for suburbs. The report also details the shift in focus from Melbourne’s previous stand out performers – the outer suburbs – back to the inner-city suburbs. This is in part thanks to increased affordability and rising prices in the outer suburbs.
Know your goals, do the research and get expert advice
If you’re considering buying, and are looking at which suburb would be best, it’s important to be clear about what your goal is. Are you looking for a family home you can raise the kids in, a renovator’s delight you can do up and sell, or are you seeking an investment property? If it’s an investment property you are considering for example, the suburbs of Coolaroo, Meadow Heights, Carlton and Greenvale all have high rental yields.
No matter your goals, when deciding where to buy a property in Melbourne, it’s essential to do your research and seek expert advice to help ensure that you select a property which meets your needs. Also, it’s vital to arrange a building and pest inspection in Melbourne before you purchase, regardless of which suburb you decide on, to ensure there are no unexpected additional costs due to building faults or pest damage.
By Darel McBride
Follow Darel on:
