It experienced a shaky period in 2019, but Melbourne wouldn’t stay down for long as it closed the year as the strongest capital city market in Australia according to CoreLogic’s Home Value Index for November 2019.
It beat Sydney for the second quarter in a row as dwelling prices rose by 6.4% compared to Sydney’s 6.2% in the three months to November, and based on current trends these are poised to hit a new high in early 2020 after plateauing in May 2019. This increase in property prices is expected to be supported by activity from lifestyle buyers and baby boomers looking to retire.
“The Melbourne property market is slowly regaining its confidence, and the underlying fundamental growth drivers remain strong. Auction clearance rates are rising, and buyers are back in the market,” says Kate Forbes, national director at Metropole Property Strategists.
“Overall, property values will be underpinned by a robust economy, jobs growth, Australia’s strongest population growth, and the influx of a large proportion of all overseas migrants.”
These crucial factors continue to serve as a strong foundation for Melbourne and were able to cushion the market during the downturn. Thus, the city is expected to outdo Sydney through 2020, even if the rate of growth is not as intense as it is now.
“Melbourne rates as one of the 10 fastest-growing large cities in the developed world, with its population likely to increase by around 10% in the next four years,” Forbes points out.
“Melbourne is currently offering investors an opportunity to buy investment-grade properties counter cyclically in a buyer’s market, with little further downside and the prospect of the market moving forward again.”
Many buyers are taking the opportunity to buy into Melbourne’s premium market while growth potential remains strong.
“In Melbourne, top-quartile values were up 8.1% over the same three-month period compared with a 4.2% rise across the lower quartile,” says CoreLogic head of research Tim Lawless.
“Thus, although housing values are rising across each of the valuation cohorts, the recovery trend is most concentrated within the premium sector of the market. This is most evident in Sydney and Melbourne, where the top quartile of the market is outperforming the broad ‘middle’ of the market and lower quartile.”
SUBURB TO WATCH
FLEMINGTON: Unit prices stay low
The suburb of Flemington is well known for being the home of the Flemington Racecourse, where the Melbourne Cup horse race has been run since 1861. In fact, Racecourse Road serves as the main commercial hub in this suburb, with shops, cafes and a railway station.
Flemington’s appeal to buyers can be seen in how consistently its prices have been increasing – the house market passed the million-dollar mark as values recorded an 8.5% boost in the 12 months to November 2019. Meanwhile, unit prices experienced a remarkable upswing of 14.6% in the same period; nonetheless, the median unit value remains quite reasonable at under $450,000.
Tourism: The suburb is home to the popular Flemington Racecourse, which hosts the Melbourne Cup
Amenities: Racecourse Road is a bustling hub, with shops, cafes and a train station
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