No crash in sight for Melbourne, but tread carefully
There’s no immediate threat to the housing market in Melbourne — which many property investors consider as second to Sydney — but it isn’t exactly booming either, says one property expert. Here’s what he says smart property investors need to watch out for.
While Sydney’s property value leads the way for investment in Australia, Melbourne is close behind, by six months in fact, according to Simon Pressley, managing director at Propertyology.
“[Melbourne’s] cycle has really mirrored Sydney. It probably was six months behind it when it started, and I think history will probably prove it may be finished six months later,” Mr Pressley told Smart Property Investment.
“I feel Christmas just gone probably marked the end of Melbourne’s growth cycle. Here we are in March and Melbourne’s currently had three consecutive months of declines.
“I certainly don’t see Melbourne crashing, but I think what’s quite probable is several years of stagnation.”
Mr Pressley said that there has been a record number of building approvals for both Sydney and Melbourne, which will contribute to future supply, something that many investors may underestimate.
The driving force behind these two markets, Mr Pressley said, is their strong economies, which is his number one influence for considering where to invest. But at the same time, interested parties who have already decided to look into property investment in Melbourne and Sydney would have likely done so, and he believes we have reached the end of that current cycle.
With that in mind, when is the best time to be looking to invest in a market? Mr Pressley’s advice is to target an area with a growth cycle beginning. But that is easier said than done.
“No one can tell us when the next growth cycle’s going to start, but if we look back over history throughout all locations, not just Sydney and Melbourne, on average, you’re talking six to maybe 12 years between growth cycles,” the MD said.
“If you’re looking to invest today and you bought a property in Sydney or Melbourne, there is the potential that you could see nothing for six-plus years while there’s oodles of other parts of Australia where the growth cycle hasn’t commenced yet. So, to me, it would be much more sensible looking elsewhere.”
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