Victoria continues to dominate in terms of population growth and migration levels, but the property market may be slipping
Melbourne remains a solid competitive market, especially in comparison to Sydney, even though auction results for November 2017 were not favourable.
"Victoria remains a state with strong investment opportunities, and I believe it has the potential for the most stability in prices moving forward, despite the fact that clearance ratesat auctions have bene declining," says Charles Tarbey, chairman and owner of Century 21 Australia.
“However, investors should be aware that although vacancy rates have been low for some time, they have started to show signs of increasing.”
With many investors in Melbourne starting to hit their ceiling in terms of loans, the pressure of sustained high levels of growth has begun to ease in this state. First home buyers are therefore finding opportunities to buy affordable properties.
“Victoria has seen the strongest growth in housing finance for owner-occupiers over 2016,” says Matthew Lewison, director at OpenCorp.
Over the 12 months to September 2017, the number of loans granted to first home buyers in NSW and Victoria has increased by 30% compared to 2016 – a result of investors moving out of the market.
However, Melbourne’s advantage over Sydney is its position as leader in terms of population growth. “Victoria has seen the highest population growth over the last 24 months and continues to see the highest net interstate migration,” Lewison says.
This population drives most of the demand for new houses and land.
Oversupply could affect both units and houses
As a result of high demand and the increasing cost of land, new houses in Melbourne are becoming progressively pricier.
“There have been significant rises in land prices in Melbourne in 2017, and this has seen new house affordability deteriorate,” reports Angie Zigomanis, senior manager at BIS Oxford Economics.
“While lot production is likely to remain high in 2017/2018 as recent presales of residential lots are delivered, the resultant weaker demand will cause lot production to fall away from 2018/2019.”
The release of new unit stock is also heightening oversupply concerns, the effects of which could slip into the detached housing sector. As apartment prices drop, buyers are likely to capitalise, and first home buyers may elect to delay home ownership for competitive rents.
SUBURB TO WATCH
MELTON SOUTH: Academic suburb thrives
An education hub just 2km from the Melton CBD, the suburb of Melton South is enjoying spikes in its property prices.
Houses have recorded whopping growth of 27.3% while units have reported a 10.4% boost to a median price of $256,949. This indicates that dwellings in this suburb are very inexpensive, while still having a lot of potential for growth.
Affordability aside, Melton South also attracts buyers due to the abundance of amenities in the area. There are several primary and secondary scools in the suburb, as well as two shopping districts. Melton South is served by the Melton railway station, the main mode of travel to Melbourne.
Location: Melton South is about 5-10 minutes to the Melton CBD, and around 50 minutes to Melbourne's city centre.
Affordability: Priced under $400,000, both houses and units, are good for buyers on a budget.