Melbourne’s housing values take a hit, while hotspots pop up in the more affordable regional markets
While Melbourne was able to stave off the decline for longer than Sydney, it seems the slowdown is catching up with the Victorian capital.
According to CoreLogic’s Home Value Index findings, Melbourne fell behind Sydney in the three months to May 2018, recording a 1.2% drop in prices. This was the biggest decrease in a quarter for Melbourne since February 2012.
Auction clearance rates were also falling, along with the number of sales transactions, while more and more supply poured into the market.
“While the last 10 years is not predictive of the future, dwelling values are already falling in Sydney and Melbourne and regional markets are currently outperforming capital cities,” says CoreLogic research analyst Cameron Kusher in a June 2018 Property Pulse report.
“With housing in a downturn in Sydney and Melbourne and affordability stretched, at this point it seems unlikely the returns of the past decade will be replicated over the next 10 years.”
Nonetheless, the city’s downslide is being tempered by its economic resources.
“Value growth in Victoria has been substantially stronger than growth elsewhere. In fact, the region of Victoria (North West) that recorded the weakest conditions over the decade has seen value growth well in excess of the best-performing WA region.”
Outer rings generate growth
In the wake of the inner city’s struggles, the markets on the outskirts are maximising their chance to shine.
“Over the 12 months ending March 2018, the property markets of 17 out of Greater Melbourne’s 31 city councils produced double-digit growth,” says Simon Pressley, managing director of Propertyology.
“These were predominantly the outer parts of Melbourne where housing is more affordable – Hume, Whittlesea, Cardinia and Brimbank were the biggest winners.”
Geelong has also been singled out as a popular region.
“The second-biggest significant urban area of Victoria, its housing market has been going great recently and doesn’t look like slowing down. Demand is comfortably ahead of supply,” says Jeremy Sheppard, director of research at Empower Wealth.
“Housing markets to the south of central Geelong are showing the most promise. Discounting is very low, which means sellers don’t need to be at all negotiable. They know there’s another desperate buyer just around the corner.”
SUBURB TO WATCH
VERMONT: Education hub with strong unit growth
Home to the distinguished schools of Vermont Secondary College and Vermont Primary School, this suburb is maintaining a strong streak of price increases.
In terms of growth rate, units had the edge over houses in the 12 months to June 2018, as the former saw a 7.8% boost compared to the latter’s 7.0%.
Vermont is a beautiful green suburb with an abundance of parks and trees. It is mainly populated by owner-occupiers, for whom the excellent schooling options could be an attractive feature. Residents are close to major shopping centres, and the suburb is served by Mitcham train station just 2km away, as well as five bus routes that run daily.
Education: Vermont has two excellent schools, which increase its appeal to families
Accessibility: Vermont is served by buses, and the Mitcham train station is only 2km away