State of Markets - VIC November 2014
Strong price growth has put Victoria near the top of the pack
In the past 12 months, prices in Melbourne have climbed by 11.7 per cent, according to RP Data. The three months to August were particularly robust, with the city recording a 6.4 per cent increase.
Melbourne’s rental market has been consistently strong, defying typical winter trends. Through August, the clearance rate hovered around 75 per cent, according to Domain Group. In the south-east region, clearances soared up to 82.6 per cent on one August weekend.
Price growth has caused the luxury segment of the market to expand. As of July 2014, 56 suburbs in the city had a median house price over $1 million, according to RP Data. Meanwhile, the lower end of the market has shrunk. In 2009, 52.2 per cent of properties cost less than $400,000 – today, that figure is at 25.4 per cent.
Yet Melbourne has also retained affordable options for investors, especially in the west, according to the REIV. In Melton South, for example, 25 per cent of properties cost less than $217,500. In Melton, 25 per cent of properties cost less than $220,000. The REIV reports these areas are becoming increasingly popular among first home buyers.
In terms of median prices, the cheapest inner-city option is Bellfield, where mid-range houses cost $533,252, according to RP Data. For units, bargains can be found in Carlton, where apartments sell for a median of $279,872.
Affordable housing options in Melbourne’s southwest will soon be expanded. The state government recently announced the approval of a new suburb near Wyndham Vale. The 435 hectare project will eventually comprise 4,000 new houses and 12,000 residents. In addition, an innovative waterfront town centre will be built nearby.
A Herron Todd White report names Melbourne as a “safe investment market” due to its thriving cafe culture. The report identifies Footscray and Brunswick as areas which have been gentrified over recent years due to an abundance of dining establishments.
In the regions, Herron Todd White highlights Moama as a town with strong activity due to a newly released housing estate. Investors are attracted to the town’s low price point and seven per cent-plus yields, the report claims.
Fast five hotspots
Glen Huntly