Demand for Melbourne properties is expected to remain stable in the face of an approaching downturn
At the same time Sydney is recording price declines not seen in many years, Australia’s second largest city is still running a tight ship.
“Melbourne seems to be holding up a lot better – we’re not seeing the same drop in demand from buyers or renters, so they’re still on the way up,” says Nerida Conisbee, chief economist of REA Group.
"But certainly, we're not seeing the great leap in demand that we say last year."
The stunted growth has been attributed to both offshore and local investors pulling back as a result of the restrictions placed on loans. Negative gearing has also made its mark, and buyers have less incentive to consider off-the-plain-purchases.
However, this could have a positive effect on high-priced markets like Melbourne because it pushes property values to stabilise.
In the process, likely as a result of many buyers being priced out of the city, the outer northeast and the outer east rings of the city are rising up as attractive areas that are seeing great demand. Standout suburbs include Briar Hill, Warrandyte and Kalorama.
Regional Victoria picks up
Cameron Kusher, research analyst at CoreLogic, notes that in the three months leading up to February 2018, dwelling prices fell sharply in the priciest suburbs. The inner south, inner east and inner pockets of the city reported decreases of more than 1% in price through the quarter, and suburbs that did not record value drops saw lower growth rates.
The outer regions have stepped up, meanwhile – the Mornington Peninsula recorded the most significant market growth, at 1.8% in the same period. In addition, the western and northwestern areas of Melbourne reported high levels of growth at 13.3% and 12.8%, respectively. Affordable markets have witnessed more growth in the past 12 months leading up to February 2018 than they have in five years.
Melbourne’s continued stability is also reflected in its dominance of CoreLogic’s Top Performing Suburbs Report for February 2018; the city took up 39 of the top 50 slots.
“These results are in alignment with the performance of the housing market generally being a two-speed market of Victoria and NSW performing more strongly than the rest of the country,” says Tim Lawless, head of research at CoreLogic.
SUBURBS TO WATCH
WEASTMEADOWS: A skyrocketing house market
The suburb of Westmeadows has had a very good year. CoreLogic data indicates that values are strongly on the rise, particularly in houses.
While growth in units hasn’t been as significant long-term, this sector’s performance was excellent between January 2017 and 2018; prices increased by 11% and pushed the median value to just over $450,000. The average rental return is fairly high at 4.7%, which could cultivate a strong rental market.
Westmeadows is primarily a residential suburb located 17km north of the Melbourne CBD. Bordered by Yuroke Creek and Moonee Ponds Creek, Westmeadows is home to Broadmeadows Valley Park, an undeveloped strip of land that lies under the flight path for Melbourne Airport.
Growth: Both house and apartment prices increased between January 2017 and 2018
Location: A reasonably priced suburb, Westmeadows is a 30-minute drive from the CBD
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