VIC Excerpt from the 2018 June Market report

Commuter towns are getting a boost as first home buyers movie in and investors drop out of the buying market

The new supply expected to come on to the Victoria property market following the completion of construction projects may be an additional blow to a market that is already starting to struggle.

“Motivated buyers who can still afford to buy in Sydney and Melbourne are now few and far between, and large volumes of new supply hitting the market,” says Simon Pressley, managing director of Propertology.

“Investors might be wise to start thinking about whether now is a good time to sell and recycle their profits into other markets.”

With APRA and banks placing increasing pressure on investors, demand has slowed down in Melbourne, and at the rate the property cycle moves, it could be a while before the city recovers.

“The reduction in interest-only lending and also the increase in interest rates, which is slowly lending, and the high risks to investors already mean that buying power is more limited now,” explains Angie Zigomanis, senior manager residential property at BIS Oxford Economics.

“Many are finding it difficult getting into the market, or they can’t compete with the first-time buyers as well as with the established owner-occupier market because buying power is not as strong.”

While Melbourne has handled the loss of investor demand better than Sydney due to its stronger population growth, the effect on prices can be seen.

“While there’s still growth occurring in Melbourne, it’s not that strong any more. That’s partly why first-time buyers are taking the opportunity to buy some more affordable housing,” Zigomanis says.

Affordability on the outskirts

To find such low-priced dwellings, buyers are heading out to areas like Ballarat and Geelong, where they can capitalise on stamp duty concessions. As a result, these pockets are picking up.

“It’ll be mostly the regional areas that people can still commute to Melbourne from, because people from Melbourne want more affordable housing, and most of these people still have connections and jobs in Melbourne,” Zigomanis says.

This situation points to the suburbs in the middle and outer rings of the city capturing the spillover from those priced out of the inner city. According to Damien Lee, head of acquisitions at Caifu Property, that means these areas will get busier and will have higher growth prospects.

SUBURB TO WATCH
BAYSWATER NORTH:
Industrial hub attracts buyers

As an industrial and commercial district, Bayswater North is unsurprisingly experiencing consistent growth due to the employment opportunities it offers.

The suburb recorded over 50% growth in both house and units prices in 2013, and while houses initially seemed to have the edge, units are now coming into play as unit values have increased by 19.7% compared to 12.6% for houses in the past 12 months. Units are also selling faster than houses, spending an average of just 20 days on the market.

Bayswater North, while a separate suburb from Bayswater, is often lumped in with its neighbour. This is likely because Bayswater houses many of the facilities that serve Bayswater North, such as the railway station. Nonetheless, the suburb has its own shopping centre, Canterbury Gardens.

Bayswater North, while a separate suburb from Bayswater, is often lumped in with its neighbour. This is likely because Bayswater houses many of the facilities that serve Bayswater North, such as the railway station. Nonetheless, the suburb has its own shopping centre, Canterbury Gardens.

Location: Bayswater North is near an amenities hub in Bayswater

Employment: The suburb’s many local businesses provide job opportunities

Can you afford to buy in this suburb? Find out how much you can borrow

Top Suburbs : redcliffe , cardiff south , nightcliff , rockville , coorparoo

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