Melbourne inside out
Despite the bad press they’ve been getting, Melbourne’s outer suburbs harbour hidden pockets of investment potential.
Victoria’s property market is continuing to defy the state’s lacklustre economic climate as sentiment has gradually improved over the last few months. This has been seen in an increase in the number of home loan approvals, particularly in the value of loans for investment housing, as well as consistently strong auction clearance rates.
More critically, a handful of Melbourne’s outer areas have shown their resilience, despite dire warnings of oversupply issues gnawing away at price growth.
Adrian Foster, director of Hockingstuart Frankston, says demand has climbed steadily in certain outer-city areas over the first half of 2013, with especially strong signs emerging in Melbourne’s southeast. “We’ve seen annual growth of up to 7.5% in suburbs like Langwarrin, Frankston and
Frankston North,” he says.
Foster adds that these suburbs are among fringe areas of the outer city that have been shielded by the excessive supply of units still coming onto the market within the inner city.
“Investors are starting to consider outside the traditional inner-city developments… At the moment there’s 25,000 new apartments scheduled to be released in or near the CBD,” he says.
Something to consider is that Greater Melbourne’s southeast remains a popular region for first home buyers, and has started to attract investors too, as the local population grows and job markets develop outside of the CBD.
Spearheading a list of southeast growth drivers is a $110m development at Port Hastings on the Mornington Peninsula, announced in April. The project is expected to create hundreds of jobs over the next four years, spurring economic growth in the area.
That the area is already fairly popular can be seen in the consistent population growth over the last decade, which has doubled the population of many suburbs in Melbourne’s southeast.
Foster says the recent introduction of the Peninsula Link, a 27km stretch of freeway connecting Carrum Downs to Mount Martha, is likely to draw even more people to the area, with recent Real Estate Institute of Victoria figures placing Frankston, Mount Martha, Frankston South and Langwarrin in the organisation’s top 20 growth suburbs.
“Suburbs like Langwarrin and Frankston are attractive to investors because housing is more affordable and amenities and infrastructure are already in place. The opening of the Peninsula Link has given the area a huge boost, with many residents no longer being subject to a long commute into the city,” Foster says.
The inner city
While select outer suburbs perform reasonably, given the Victorian economy’s subdued outlook, NextHotSpot’s director Andrew Peterson points out that the city-wide property market as a whole still faces staunch challenges.
“Melbourne’s oversupply of housing has attracted plenty of comment in the press, and amazingly enough they keep building. One of the areas of greatest concern is around the CBD, Southbank and Docklands. A quick search of property for sale in these areas throws up large numbers of units on the market at a significant discount to their relatively recent sales prices,” Peterson says.
As price growth in these city regions languishes, other areas are holding out. Hockingstuart Brunswick director Rob Elsom has been selling properties in Melbourne’s inner city for 15 years and says activity has been improving over the first part of 2013.
“We’ve seen strong demand in areas like Thornbury, predominantly from investors and families who have been priced out of nearby suburbs like Northcote,” Elsom said.
“People find Thornbury attractive because it’s still affordable and well serviced by public transport, schools and other amenities. Buyers don’t want to overcommit because there’s still some insecurity about the job market, but they also recognise that, with low interest rates, the stars have aligned to create better buying conditions.”
Spotlight on: Melbourne’s most oversupplied markets
Property supply statistics for the city tell a different story, depending on whether you’re looking at the market for units or for detached houses. For units, the inner city is the most oversupplied market, with the Melbourne CBD particularly affected.
There, the buying market is still trying to absorb more than 600 properties that are on the market. For detached houses, the city’s northern and western fringe regions are largely the most oversupplied, with Greenvale currently the most oversupplied market in the entire city, measured by the proportion of all properties in the suburb that are currently up for sale.
Those who doubt the aff ect such oversupply issues can have on property values should consider
this: property values over the last 12 months have decreased in all of the house markets in this list. The biggest loser has been Wyndham Vale houses, which lost nearly 10% of their median value, representing close to $25,000.
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