The verdict is in; Melbourne has officially overtaken Sydney in the most profitable property investment market in Australia.
Over the past twelve months the value of dwellings across Melbourne has risen by 10.1%, compared to Sydney which had an annual growth of 8.9%. While we are seeing Melbourne’s year on year growth slowing from its previous peak of 14.2%, it remains the only capital city to have recorded double digit home price growth over the past year, confirming that the city is Australia’s most resilient property market.
Type of Dwelling
As always, it is important that property investors consider these figures in light of the type of dwellings associated with the numbers. Often we see decent variations between performance of houses and apartments and this holds true for this case. Houses were the top performers in the Melbourne property market over the past twelve months, rising almost 11% above previous levels. In contrast, apartments saw a year on year growth of 4.7% for the same period.
Location, location, location
While property investment activity is expected to increase across Melbourne, the above figures reflect growing concerns about the influx of apartments within five to ten kilometres of the CBD, with investors looking to the city’s outer suburbs for more affordability and future growth potential. Figures show that Melbourne’s median house price remained stable during the March quarter of 2016, resting at $713,000, while apartments saw a 1.8% fall in prices during the same period, sitting at a median price of $525,000.
Of the top performing suburbs in Melbourne, Malvern East was the only one residing within ten kilometres of the CBD. This is startling considering that twenty of the top growth suburbs were located in outer Melbourne suburbs such as Langwarrin and Keysborough. Median house prices in Melbourne’s outer suburbs, those more than twenty kilometres from the CBD, sat at $557,000 for the March quarter.
The figures are showing us that in the current property market, investors are looking for more bang for their back, turning from the recent, very popular apartments in the CBD, to homes in Melbourne’s outer suburbs. With interest rates set to remain at desirable levels, demand for more affordable housing is likely to remain high.
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The information provided is of a general nature and is not intended to be constituted as financial advice. We recommend that you seek independent advice from qualified professionals before employing any strategies outlined.