7 Things You Need to Know About Melbourne’s Property Market Right Now
The nation’s second-biggest city has seen residential property prices surge. Here’s everything you need to know about the current property market in Melbourne.
Well known as one of the most liveable cities in the world, Melbourne’s unbeatable lifestyle coupled with lower prices than Sydney makes it a major drawcard for both first-time buyers and investors. Despite gloomy predictions during the height of Covid-19, the market made a swift recovery and is poised for further growth. Here are 7 key trends we are seeing in the property market in 2021.
An Era of Growth
As reported by the Real Estate Institute of Victoria (REIV), Melbourne’s median house prices broke records in the first quarter of 2021, crossing the million-dollar mark. In metropolitan Melbourne, the median house price sits at $1,004,500, jumping 8.8% from the previous quarter. Units in metro Melbourne also increased 4.8%, achieving a median price of $672,500. A recent ANZ forecast predicts Melbourne prices could see a sharp rise up to 16% this year, Domain reports, however this growth is expected to slow in 2022.
Safe Investment Suburbs Continue to Rise
Melbourne’s most desirable and expensive suburbs will continue to experience rapid growth with post-lockdown demand driving up prices. These include suburbs that are well connected in terms of public transport, local amenities and elite schools – such as East Melbourne, Brighton, Malvern and Kew – and tend to have limited stock. In some neighbourhoods, such as Mont Albert in the inner east, median house prices lifted a whopping $1815 each day in 2020, according to the Herald Sun. It’s projected that Melbourne’s exclusive suburbs could see up to 20% increase before they peak.
Lifestyle Locations on the Up
Flexible working conditions have meant many city dwellers are swapping their metropolitan homes for a more favourable lifestyle. In December 2020, four of the top 10 suburbs for daily dollar increase were located on the Mornington Peninsula, including Portsea, Sorrento, Tyabb and Flinders. According to REIV, median house prices in regional Victoria have surpassed $500,000 for the first time, reflecting over 12% annual growth. Closer to the city centre, bayside suburbs such as Black Rock remain in high demand with a very low turnover of stock, while Albert Park saw the highest daily dollar gains for units.
Increased Appetite for First-home Buyers
The combination of stamp duty discounts and record-low interest rates has encouraged an influx of first-time buyers into the market, with first-home mortgages at their highest level since 2009. As reported by Domain, in the outer east suburbs of Ringwood and Croydon, unit sales are booming thanks to first-home buyers, while suburbs such as Footscray, Reservoir and Brunswick continue to surge in popularity. First-time buyers can avoid paying stamp duty if the property is priced under $600,000 and receive a duty concession on homes valued up to $750,000.
The West Side Story
First-home buyers are looking to crack into the Melbourne market by seeking out properties in Melbourne’s west and northern neighbourhoods. According to Domain, suburbs such as Footscray, Seddon, Kingsville and Yarraville are seeing mass migration among young buyers, swapping their small, inner-city pads for more affordable and larger family homes across the Yarra. To put it into perspective, the median house price in trendy Richmond is $1.38 million, while in Footscray it’s sitting at $885,000.
Good News for Renters
In the Inner City, Melbourne’s rental prices have continued to fall with record-low vacancy rates for both houses and units. This has largely been the result of fewer international students, lower than expected population growth and a high rate of new developments and high-rise apartments. That being said, house rents reached record highs in the outer east, south east and Mornington Peninsula. Investors should seek out suburbs with strong infrastructure outside the main CBD, such as Box Hill, Melton, Craigieburn, Brunswick East and Seaford, which are tipped for significant growth.
Record Sales at Auction
Victoria has had its biggest autumn auction season on record, with more than 10,000 sales recorded through REIV. This represented an 82.5% clearance rate, the highest since 2007. The suburbs of Reservoir, Glen Waverley, Mt Waverley, Craigieburn and Richmond were the top five suburbs for auction sales. In fact, the month of May broke the record for the highest number of auction sales in a month, exceeding 4,000.
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