Melbourne strengthens, despite the odds
Moderate growth looks set to continue for the property market in the world’s most liveable city – despite an ongoing oversupply of apartments
Weak indicators in the broader Victoria economy aside, Melbourne’s property market is still displaying signs of ongoing, albeit modest, growth. Recent data from several sources makes it clear that Melbourne’s housing market is continuing to recover.
Compared to a year ago, conditions for both buyers and sellers are a lot more favourable, according to the Real Estate Institute of Victoria’s (REIV’s) Enzo Raimondo. “Consumer sentiment has improved, auction clearance rates are higher, and the number of transactions overall has increased, indicating there are now more buyers in the market.”
Raimondo adds that now that the cash rate is at a record low, even more buyers should stream into the market, further supporting market recovery.
While the overall market is improving, it is important for buyers and vendors alike to consider local market conditions as well. Raimondo says different parts of the city have performed in contrasting ways. Suburbs such as Kew, Ringwood, and Essendon have recorded above-average growth in their quarterly house prices. Others such as Narre Warren North, Northcote, and Footscray have not.
Herron Todd White’s Tony Kelly says Melbourne residential real estate is expected to experience moderate growth to the end of the year if the current trend continues.
A number of inner-city and outer suburbs showed the strongest growth in the recent quarter, he says. “Outer southeastern suburbs such as Lilydale, Croydon, Frankston and Langwarrin are more affordable areas that experienced stronger price growth. Frankston and Langwarrin have benefited from the opening of the Peninsula Link, with residents’ commute times to the city being significantly reduced.”
These areas are starting to attract investors interested in affordable properties in suburbs set to benefit from a growing population and employment market as demand increases, Kelly says.
Oversupply issues continue
Docklands, Southbank and the CBD continue to have an excessive supply of apartments coming on to the market, Kelly says. There are currently over 25,500 apartments scheduled to be released within inner-CBD suburbs this year and next.
Kelly says part of the problem is that inner-city developers have been encouraged by international market forces to keep building.
“With restrictions on overseas buyers being able to only purchase new or off-the-plan properties, apartment complexes are going up left, right and centre and are being heavily supported by foreign investment.”
Melbourne world’s most liveable city – again
Melbourne has been named the world’s most liveable city by the Economist Intelligence Unit (EIU) for the third year in a row.
The EIU’s annual Global Liveability Survey ranks 140 cities around the world by scoring them in five categories: stability, healthcare, culture and environment, education and infrastructure.
Survey editor Jon Copestake says the top cities are similar to last year, with Australian and New Zealand cities landing five of the top 10 spots. “The top spots are mostly mid-sized cities in wealthier countries with a relatively low population density.”
The EIU survey did not factor in the cost of living or affordability.
Suburb to watch
The biggest draw card for buying a property in the tree-lined streets of Carlton is the cosmopolitan lifestyle on off er, Hockingstuart Carlton director Rob Elsom says. “It has an essence of European heritage strongly underpinning it. And it’s a suburb that’s constantly bustling.”
There are cafes, restaurants and bars nearby, it’s within walking distance of the city, and it’s surrounded by universities, public transport, parks, leisure centres and cinemas. Carlton is served by buses and trams, and has excellent amenities of all types.
Once home to Italian migrants who gave Lygon Street its ‘Little Italy’ title, Carlton is now incredibly diverse, Elsom says. “This is thanks to its proximity to universities and the CBD, which has attracted an influx of local and international students, many young families and professionals. It’s a lively, youthful suburb.”
The City of Melbourne is also working with local residents and businesses on the Opportunities for Carlton Project. This project encourages community participation to help direct the future development of the suburb.
As one of Melbourne’s oldest suburbs, Carlton is known for its period architecture and Victorian terraces, Elsom says. “Recently, many new developments with one- or two-bedroom apartments have been emerging. They cater to young professionals or international university students who want to be close to all the action but don’t spend that much time at home.”
It is hard to predict exactly what will happen in the future, but Carlton is sure to remain one of the strongest real estate markets on Melbourne’s city fringe, he says. “Despite the ‘GFC’, Carlton performed very well over the past 3 years, with only a slight dip in the median house price. I believe the suburb’s prices will perform slightly higher than Victoria’s average with modest increases.”
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