Melbourne Property Market Update August 2019
It is fair to say that despite the reported signs of green shoots, 2019 remains a buyer’s market. Buyers are not as rushed as they once were and now have time on their side to look at all the options when considering a purchase.
So, if this is the case, what are they looking for in 2019? Are they looking to just to get a foot in the door, long term growth, be close to employment or education, or are they looking for more of a lifestyle choice?
CBD Property Updates
The city centre has seen a continued substantial increase in the supply of high rise apartments. Lifestyle changes have led to people seeking a better work and life balance; as such properties located within half an hour of the CBD and close to public transport links continue to be highly desired by first home buyers.
Developers are encouraging buyers by including amenities such as rooftop gardens, creative common facilities such as virtual golf, private dining areas with industrial kitchen facilities allowing residents to bring in a private chef and meeting rooms for the home office operator.
For an entry-level price of $580,000, you will find a one-bedroom, one-bathroom apartment in the Prima Pearl located at 35 Queens Bridge Street, Southbank and access to the mentioned amenities.
Young professional couples or small families looking to upgrade their one-bedroom apartment for a bit more room do not have to go far. Suburbs on the city fringe such as Collingwood, Richmond, Prahran and South Melbourne still have access to public transport to the CBD, schools and close proximity to local restaurants and cafes. Property types vary from townhouses and single-fronted dwellings that can accommodate two-to-three bedrooms, two car spaces and a small courtyard.
7 Palmer Street Richmond, VIC, 3121
Sale Price: $1.55 million
Sale Date: 6 March 2019
3 Bedrooms, 2 Bathrooms, 2 Car spaces 150 square metres
Source: RPData, July 2019
At the prestige end of the market, buyers are looking for properties with a period character or dwellings that can be easily renovated, extended or rebuilt and designed to suit their needs. Staple items within this category include basement car parking, en suite to each bedroom, a games room, swimming pool, tennis court and gym.
26 Linlithgow Road, Toorak, VIC, 3142
Sale Price: $12.15 million
Sale Date: 14 March 2019
5 Bedrooms, 4 Bathrooms, 4 Car spaces 1,308 square metres
Source: RPData, July 2019
East Property Updates
In a handful of blue-chip suburbs located in Melbourne’s east, property prices have corrected to mid-boom levels following the recent sharp correction. Balwyn North and Kew are just two of the eight suburbs in Melbourne where the median house price is similar to that of the 2015 property market.
This doesn’t mean first home buyers will now have a better chance of purchasing homes in these areas. It does however, allow first-time buyers searching for apartments in the east to have more of a chance to secure a property. A downward swing in the market for the first time in years is now allowing young individuals and couples a fighting chance to purchase property in dominating suburbs.
2 Victor Avenue, Kew VIC 3101
Sale Price: $1.6 million
4 Bedrooms, 1 Bathroom, 4 Car Parking
Source: Domain.com.au, June 2019
While the pressure of the property market has eased in recent months, the types of property available on the market such as detached dwellings and apartments etc largely remain the same despite lots of residential developments taking place in Box Hill and Ringwood at the moment.
This is very different from large englobo estate developments that are happening in areas with an abundance of vacant land available such as Truganina, Melton and Werribee. Of the properties in Melbourne’s eastern region, around 33 per cent are owned outright or mortgaged, with 20 per cent of housing comprised of townhouses or semi-detached homes and 33 per cent of residential properties being high-rise apartments.
The eastern suburbs are proving to be popular with first home buyers due to the number of schools located in the region. Catchment areas of elite government schools such as Camberwell High School are highly sought after as buyers want to allow their children to have the best possible education.
Couples looking to upgrade will likely move to the east to have an opportunity to live in a residential home and raise a family. Suburbs such as Ringwood and Mitcham in the outer east will most likely be more desirable as the median house price for those suburbs is $830,000 and $920,000 respectively.
These suburbs boast great access to coffee shops, restaurants, gyms and health clubs that is highly desirable and are also very close to transport and schools. Some of the most popular and desirable areas include Kew, Hawthorn, Camberwell and Balwyn.
Travelling into the city by train from Hawthorn and Camberwell takes 15 and 25 minutes. This short trip is not only a selling point for those who commute to corporate jobs in the city but also allows their children access to quick transport to school via tram or train. This drives the price of homes in these areas upwards.
The Hawthorn median house price sits at $2.1925 million and Camberwell’s median house price is $1.955 million. This market is geared towards established families or couples who are well resourced and are able to afford the choices of lifestyle that come with living in the eastern suburbs of Melbourne.
2/51 Cobden Street, Kew VIC 310
Sale Price: $1.275 million
3 Bedrooms, 2 Bathrooms, 2 car parking
Source: Realestate.com.au, May 2019
South-East Property Updates
Young families in the outer south-east are predominantly seeking to build new homes in developing estates to cater to their individual needs. Back yard space has given way to larger dwellings with an increased number of bedrooms and alfresco areas for entertaining. Young families tend to be more focused on current needs, rather than long term growth potential.
Many estates in the outer south-east promote a family-friendly lifestyle and are usually located close to childcare centres and parks. The availability of the First Home Buyers Grant when a building is another factor that draws first home buyers to these areas. In Clyde North, for example, there are fixed price house and land packages for as little as $550,000. This includes a 400 square metre block with three bedrooms, two bathrooms and a double garage.
Apartments close to popular universities such as Monash Caulfield and Monash Clayton and within close proximity to cafes and shops are also seen as a good investment for many first home buyers due to the fact that apartments close to amenities tend to hold their value better and are continually in steady demand from locals as overseas investors are excluded from buying on the secondary market. It is possible to find a two-bedroom, one-bathroom apartment within walking distance of Monash Clayton, Clayton train station and Monash Medical Centre that will set you back between $340,000 and $380,000.
Many couples and families looking to upgrade from their first homes often have well-paid jobs based in the CBD. These home buyers are often looking to move closer to the city, in particular, close to train stations as the cost of parking in Melbourne’s CBD continues to rise and people look for more economical alternatives. Homes accessible to the Frankston and Sandringham train lines are more resistant to economic slumps as most large companies continue to base their headquarters in the CBD.
Many top private schools (such as St Leonards College and Haileybury College) located in the middle suburbs help drive the inner south-eastern market. Buyers tend to choose low maintenance properties due to having busy lifestyles, involving frequent travel for work or leisure. Older couples with adult children who have flown the nest choose smaller homes or apartments within walking distance of cafes and local shopping strips.
At the prestige end of the market, proximity to the beach is still a key driver, as is privacy and coastal views over Port Phillip Bay. Locations in the southeast such as Brighton and Portsea have a sense of prestige attached to them and are reserved predominantly for top income earners. New line streets within close proximity to the Rosebud and Dromana foreshore are also popular, as over the summer these residences will always have great short-term leasing potential.
As there is a large retired population on the Mornington Peninsula, many retirees are looking to buy into lifestyle communities (for example Peninsula Grange Retirement Community and Lifestyle Hastings) where they can maintain their independence while having all the required amenities such as a swimming pool, gym and cafe at their doorstep.
Inner / Outer North Property Updates
Melbourne’s inner and outer northern suburbs continue to be a hotspot for home buyers for several reasons. The bustling vibe and continued growth are separating the good from the bad as home buyers search for properties with larger land size, bigger internal living spaces and more bedrooms as well as proximity to public transport, cafes and shopping facilities and a short distance to the CBD.
Focusing on the inner north, locality is key. Victorian and Edwardian style dwellings are proving to be the most popular product on the market. These dwellings provide a retro or heritage façade, cosy fireplaces and structured living layouts making them an ideal investment or rental property.
Pressure on inner-city parking is becoming more of an issue, which is making inner-city properties with parking spaces extremely hot property. Home buyers who are not winning the race to these properties are finding locations close to public transport.
- First home buyers in this region are looking to get their toes in the water, meaning an apartment building will likely be the first choice for many. Location is key with buyers looking for properties close to public transport and large shopping centres. Price expectancy is $400,000.
- Upgrade home buyers will be investing in significantly larger properties in comparison to a first home buyer. This will include bigger and better facilities internally making living conditions more comfortable. Price expectancy is $1.25 million.
- Prestige home buyers will be looking for the whole works – double-storey, recently renovated dwellings. They will have added features such as increased ceiling heights, top of the range fixtures and fittings, high-quality finishes and premium outdoor areas. Price expectancy is $3 million.
Moving to the outer suburbs, the market is showing that land size and living space size are drawing home buyers. Demand for more bedrooms and bigger living spaces continues to grow as young families move toward these areas due to improving infrastructure and facilities, including schools and shopping centres such as Craigieburn Central.
The outer suburbs are providing home buyers with more flexibility and options when it comes to factors such as car spaces, the number of bathrooms and living layout whilst being more cost-effective.
- First home buyers in this region will most likely be looking in new estates, purchasing off the plan developments which will include a house and land package. Price expectancy is $400,000.
- Upgrade home buyers will be investing in larger dwellings, with an increased number of bedrooms, larger land size and more living spaces. Price expectancy is $600,000.
- Prestige home buyers will be looking for the whole works – double-storey, renovated new dwellings. They will have added features such as increased ceiling heights, modern finishes, landscaping, more living rooms, bedrooms and bigger block sizes. Price expectancy is $900,000 to $1 million.
Outer West and Geelong Property Updates
In the outer west of Melbourne, it appears that affordability is the key driver for a first home buyer and young families looking to break into the property market.
Comprising two of the fastest-growing municipalities, Wyndham and Melton, these areas offer a number of new housing estates catering to the Melbourne population boom. With affordability being a key driver as well as a want to have it all mentality, first home buyers seem to be opting for a new house and land package further out rather than purchasing an established dwelling closer to the city.
Buyers will compromise on the size of the dwelling, size of land and location, purchasing new house and land packages within developing estates often feeling they are getting more bang for their buck. According to HIA Chief Tim Reardon, Rockbank’s Mount Cottrell located 42 kilometres from Melbourne’s CBD was the top building and population hotspot in 2018 as it witnessed an annual population growth rate of 59.4 percent and $224.2 million in building approvals.
For those seeking to upgrade, buyers tend to look closer to Melbourne’s CBD however it needs to be either modern or refurbished and be a substantial upgrade from their existing residence.
Similar to Melbourne’s outer west, first home buyers are looking to master-planned estates due to their affordability as well as access to local amenities such as shopping centres, cafes, recreational facilities, schools and childcare facilities. Unlike the outer west, Geelong receives an additional subsidiary grant and incentives as it is classified as regional living. These incentives can be worth up to $31,000.
According to state government figures, 719 first home buyers purchased existing homes in Geelong in 2017. One year later, that number had jumped to 1,217. There was also a 33 per cent jump (to 721) in the number of first-time buyers electing to build in the 2017/18 financial year.
For those seeking to upgrade there are a number of factors to consider. Dwelling size, condition, proximity to local schools, catchment areas, distance to shopping hubs, recreational facilities and access to public transport are important. Often buyers tend to remain within the same area however just upgrade as their needs change.
A recent example was a sale in Belmont which had several transactions where both buyers and sellers resided within the suburb itself, setting off a domino effect of sales.
Driven by the need for a large home and not wanting to give up on Belmont’s central location and proximity, the purchasers sold their property to a local resident, who also then on-sold their property to a local resident.
For the prestige end, it appears that buyers are looking for a dwelling that has it all from build quality, size, and location as well as unique factors that really make the property stand-out and be that once in a lifetime opportunity. One thing, however, remains consistent – buyers are looking for privacy and security and it appears this plays an important role in their purchase.
Speak with a Melbourne Mortgage Broker today.