Figures from the Real Estate Institute of Victoria (REIV) show suburb on Melbourne’s northern fringe, such as Craigieburn and South Morang were home to strong performances in the 12 months to March 2016.
In Craigieburn, the REIV figures show the median house price increased 10% over the year to $417,000, while total sales increased 88% over the same period.
In South Morang, the median price in the year to March increased 7.4% to $485,000 as the number of homes in the suburb taken to auction increased 62% in the same period.
For Melbourne based independent buyer’s agent Cate Bakos, the positives shown by suburbs such as Craigieburn and South Morang are likely the result of increased homebuyer activity.
“Those areas are usually owner-occupier areas and investors probably wouldn’t typically go that far if they’re aiming for professional, young tenants because they want to stay closer to the city,” Bakos said.
“Areas like Craigieburn are a long way from the city, but for the owner occupiers they would probably have to spend double for a house if they were that far out in the east,” she said.
While Craigieburn and South Morang may be outside of the areas Bakos usually focusses on, she said suburbs anywhere in Melbourne associated with home buyers have received a new lease of life recently.
“There’s no doubt that with the lending restrictions that have applied to investors we have seen the balance of investors and homeowners continue to shift in favour of homeowners in terms of the value of lending and so the areas that are homeowner centric are doing really well,” she said.
“It’s certainly across all of Melbourne. We’ve seen house performance certainly outperform unit performance and that’s been consistent since the lending restrictions came into play just over a year ago.”
While those looking to Melbourne’s outer suburbs may be owner occupiers currently, they could soon face more competition following a shift in investor preference, in part due to the lending constraints.
“There have been a lot of investors who have been precluded from the market or they had their borrowing power significantly reduced and they’ve been put into a different category of property and they’ve had to tone down their expectations,” Bakos said.
“Investors who used to quite comfortable spending $500,000 or $600,000 on a dated two bedroom apartment in the inner south east are now thinking twice about it because they’re not seeing they type of growth they would like,”
“Over the last year we’ve had a lot more investors who have said they’d like to find a property that at least has a little bit of land on its title, whether it be a house, or a subdivided block or even a unit with a yard.”
In terms of Melbourne’s north, Bakos said the area has some advantages for investors other areas of outer Melbourne may not.
“[Craigieburn and South Morang] are now established communities. If you wound the clock back 10 or 15 years they were house and land areas, but they’ve got some age on them now.
“They’ve had upgraded rail services and new stations over the last decade so getting into town being a commuter is becoming more possible for those areas and that’s a real win because there’s a lot of the new house and land areas that don’t have those established train lines and roads are still gridlocked.”