Melbourne

Melbourne’s median house price was forecast to rise by 8 per cent in 2020 and then by 3 to 5 per cent in 2021 until the advent of Covid 19. Property investment analysts are even predicting Melbourne’s median house price to reach $1 million mark by the second half of 2021.

Melbourne’s unit prices are expected to increase in the first half of 2020, following a strong end to 2019, before price growth slows. Median unit prices could grow by 5 per cent in 2020 then by around 3 per cent in 2021.

Strong population growth will continue to underpin demand for housing in Melbourne and support prices. Melbourne’s population is projected to grow by more than 120,000 per year in the next few years. In addition, apartment construction activity will slow in 2020 and interest rates will remain low, both factors which will drive prices higher.

However, property investors need to be selective as some areas of Melbourne have shown a huge increase in value over the past 20 years with good returns but other locations are beginning to have issues of oversupply.

Long term Melbourne property is forecast to record stronger metropolitan capital growth than its capital city rivals because the net number of new residents arriving from interstate and overseas is higher than anywhere in the nation. While Melbourne’s property prices are likely to fall by a little further, they will be underpinned by a strong economy, employment growth and Australia’s strongest population growth and the yearly influx of 35% of all overseas migrants.

Housing supply – and as a consequence, rental stock – is expected to stay lower than demand in Melbourne’s inner- to middle-ring suburbs and parts of regional centres Geelong and Ballarat. Property experts warned against investing in Melbourne’s oversupplied CBD apartments market if seeking short- to medium-term returns.

Prices are at a premium and a higher peak in many blue-chip inner suburbs, up to eight kilometres from the CBD, so investors should aim to benefit from the ripple effect by looking to buy in some of the more affordable middle-ring suburbs, 10 to 15 kilometres from the CBD, which offers much better value for money and affordability.

Overall, Victoria continues to deliver strong returns for property investors, despite concerns about the future stability of the Melbourne property market due to oversupply in some areas. A key factor is Melbourne’s continuing strong population growth. The latest population figures for Australia show that Melbourne had the largest population growth of all capital cities, increasing by 95,700 people. That growth has seen Melbourne’s population grow to 4.4 million. Melbourne is also gradually closing in on Sydney (4.8 million) as the nation’s biggest city.

Factors influencing Melbourne’s investment property market in 2020

The Melbourne investment property market has performed very well in recent years. Melbourne continues to experience strong population growth from overseas. Victoria’s population has significantly increased above the national average and it is expected to continue doing so in 2020 and beyond. This, along with the gradual rebalance of the marginal oversupply of property for investment, ensures that pressure remains on residential investment property prices in the long term.

Stick to property investing fundamentals and ignore opinions as to where the market is going, whether good or bad. Buying strong investment properties is more about asset selection rather than timing. Timing is impossible to consistently get right. Don’t wait for the right time to buy. Wait for the right property to buy.

Like any real estate investment, locating and purchasing the right investment property in the right suburb requires careful consideration and research. Buyers should look for suburbs that have strong positive attributes (more details in our info pack) For example overall appeal, good public transport, good schools, shops, close to arterials and above all, invest in areas that are consistently showing a growth in population.
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Affordability,

Melbourne residential and investment property sector is performing well and many analysts predict it to continue doing so. Melbourne also continues to show value when considered with the price levels in Sydney.
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Pent up demand

Caution required in the short term, many leading economic forecasters believe there is an oversupply of new housing in Victoria especially in the inner city areas of Docklands and the CBD.
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High consumer confidence

Motivates people to make more long term decisions such as purchasing a new home.
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Improved immigration numbers

Melbourne’s population is now increasing at a faster rate than most other capital cities, which will ultimately leading to an increase in the demand for housing and investment. Population growth is around 2% – well above the national average of 1.8%.

Overview 2020 and beyond

Remember, that when you select a unit as an investment, succumbing to the lure of tax savings is a fundamental mistake for investors. You do not attain financial independence through saving tax – you gain financial independence through the ongoing capital growth of your assets. So, get the location and returns right and the capital growth should follow.

The Annual Return Index measures the capital growth of an investment property together with net rental income, to give an accurate comparison between Australia’s cities. Melbourne’s investment property market is making another steady start in 2020 and seems set to continue to do so in the long term. Property investors should be very selective in terms of suburbs they consider for investment property. As always, look at the level of infrastructure and population growth of any property location and market in Melbourne including vacancy rates. Comparisons between the Capital cities are best considered over 7 to 10 year periods with Melbourne, Sydney and Brisbane continuing to be good options for property investment in the future.

How do I get started?

Contact us for more information on recommended suburbs and locations in the Melbourne property market.

Sydney

New South Wales, Australia

Melbourne

Victoria, Australia

Brisbane

Queensland, Australia

Gold Coast

Queensland, Australia

Property Investor Planning

Australian Property Investor Planning is a property investment company specialising in helping investors to buy new real estate in Australian capital cities.
1800 889 755