27 May, 2020
When it comes to liveable Australian cities, it’s hard to beat Melbourne.
With some of the best coffee, bars, food and art on your doorstep, it’s truly a cultural mecca for young and old, and everyone in between.
From the vibrant city centre and bohemian buzz of Fitzroy to the relaxed St. Kilda, there’s something for everyone. This extends to the property market too, with Melbourne offering a great mix of brand new apartment complexes and older fixer-uppers.
The Melbourne property market has been consistently strong over the last 40 years, making it one of the best cities in Australia to buy a home.
There’s a lot to love about Melbourne. It’s a vibrant city with almost anything one could want. It’s a home to young professionals, families of all kinds, and retirees alike. The well-connected public transport appeals to many. Others find solace in the proximity of nearby bushland, beaches, and escape into nature. It’s a great place to live and perhaps great place to consider in investing in property as well. Are you wondering what the best suburb to invest in Melbourne in 2020 is? We’ve outlined all the basics you need to know about investing in Melbourne property in 2020.
The price of real estate is already rising in Melbourne, making it more expensive than ever to buy a home in the city, but that doesn’t necessarily mean it’s the wrong time to make an investment. It’s also good to note that the rental market is getting tighter and more competitive, with many people struggling to find a property to lease.
Right now, one of the most important things to consider when deciding whether or not to invest in a property is the current trends in market prices. The market growth in Australia has slowed due to Coronavirus and house prices are continuing to drop.
Experts are warning to consider real estate purchases carefully. House prices are beginning to take a dip, so it might be worth putting real estate purchases on a slight pause for the next month or two, as there could be further dips in prices, making purchasing a house in Melbourne a bit less expensive than normal.
Melbourne property prices are continuing to dip it’s not necessarily too late to start investing. There are some areas with strong growth still expected, but there are also some markets you will likely want to heavily avoid investing in.
There are some strong drivers in the property market. There is a recent increase of first home buyers, who are capitalising on the current dip in house prices. About 1,500 new households are formed in Melbourne every week, and there’s a strong demand for purchasing and renting homes as developers, and investors consider looking towards Melbourne as a place to live or conduct business.
Melbourne sits in the top 10 fastest-growing cities in the world. In the last four decades, Melbourne has been the quickest growing capital city in the world in terms of the value of homes.
2019 saw a big change for home buyers and investors due to lower interest rates and increased leniency on the restrictions for lending buyers. All of this has been a clear indicator of strong market depth. However, house prices in Melbourne have been dropping as a result of the coronavirus pandemic. In fact, house prices in Melbourne saw a six figure drop during the period of February to April 2020 according to Domain, and experts are predicting that house prices in Melbourne could see a drop of 10-20%.
Property market trends in Melbourne are not what they used to be. Long gone are the days of 1960s’ houses coming in at just under $10,000. About 30 percent of Melbourne suburbs in general, and 90% of inner suburbs, have a median house price topping over $1 million, but that doesn’t mean all suburbs are doing equally well. Some aren’t growing quite as quickly, while other south eastern suburbs are growing at an extremely rapid pace. If you purchase a home in government school enrolment zones, you might be in luck, as these regions typically show more growth than others.
Melbourne is experiencing moderate rental growth in recent years, usually growing similarly in line with property values. There is currently an unusually low vacancy rate in Melbourne. The average rental yield in Melbourne is sitting at approximately 3.4%, and currently has the second lowest rental yield in Australia. This is a result on the decrease in migrants and seasonal workers which has seen vacancy rates skyrocket.
In the last five years, there’s been quite a surge in house value. The number of suburbs with a median house value of $1 million or more has jumped by 13 % and only 6 % of suburbs in Melbourne record houses with a median value under $500,000, although this is a jump up from prior years.
However, the growth has rapidly slowed in 2020 due to Coronavirus. Data from CBA has revealed Melbourne’s annual change in dwelling value is currently sitting at 12.4% and has already been beginning to make a downturn.
A drop in house and unit prices has been seen over the past month. For instance, the value of houses in Melbourne decreased by -0.3% over the past month according to propertyupdate.com.au. It’s not all bad news though. Unit prices have seen slight increases, with prices going up by 0.1% in the past month.
It’s an education hub. Prior to the pandemic, Melbourne had more than 200,000 students coming from overseas to study at some of Australia’s best universities. And in addition to international students, Melbourne is usually visited by over a million international tourists every year. But there are a handful of key things that really make Melbourne stand out.
It’s not just a hub for education. It’s also known as Victoria’s business, administrative, cultural, and recreational hub. There’s a lot going on in this city!
To put it simply, Melbourne was created with liveability in mind as the 2019 EIU Liveability Report named it the second most liveable city in the world. The city is divided into east and west, with affluent neighbourhoods to the east and lively and affordable suburbs to the west. Despite the Yarra River and Maribyrnong River running through the city and some well-known suburbs, public transport works remarkably well- so well that many people opt not to own any cars.
Melbourne has the longest tram rail in the world, and also boasts well-connected trains and a multitude of bus routes to get you where you need to be. In the city, trams are free, and they’re a great way to get around. According to the 2013 EIU Liveability Report, Melbourne, is doing exactly what they should be when it comes to infrastructure. They received a perfect score of 100.
There is a diverse range of industries in Melbourne. You can decide to embark in a career in arts, a career in medicine, or anything in between. Because Melbourne is a booming city, there are lots of options when it comes to employment. In the last 10 years, there have been more than 500,000 new jobs created in Melbourne. While there are currently high unemployment rates across Australia, this is expected to be alleviated by the easing of restrictions that are being seen in states such as Victoria.
People from 140 different ethnic backgrounds live in Melbourne, with large populations of Chinese, Italian, Indian, Greek, German, and Vietnamese people living in the city and its suburbs. There are welcoming places for people of the same cultural groups to meet and come together, as well as environments in which the wider Melbourne community can learn from one another. This rich cultural diversity also ensures a wide variety of amazing restaurants to choose from!
Melbourne is the largest city in Victoria and the second largest city in Victoria but looks like it might soon overtake Sydney. The city has been growing at a rate of around 3% per year, which may mean that Melbourne will be a more populous city than Sydney within the next decade. While the rate of growth is likely to slow down due to the travel restrictions that have been put in place, Melbourne remains one of the fastest growing cities in the world. All this growth is a good thing when it comes to investing in property.
Right now, a lot of middle suburbs, and some of the outermost inner suburbs, look to be great places to invest in properties as they continue to be gentrified. The city does continue to sprawl outwards, with suburbs expanding farther out in all directions, but it might not be a great idea to invest in some of these newer suburbs. In fact, some of these newer outer suburbs are quite because they don’t have quite the same value or stability as older suburbs.
It depends on your lifestyle and budget, but you may want to consider some older, well-established suburbs or some of the booming inner suburbs. Be sure to do your research to understand what areas and types of property fit your needs.
The price of a house, apartment, or unit may vary greatly. In less expensive inner suburbs, like Footscray, you might get lucky and find a house selling for around $730,000. In more distant suburbs, it’s possible to find units for or as little as $345,000. On the lowest end of the spectrum, you might expect to spend around $350,000 and in the most expensive suburbs, you could spend close to $5 million.
If you’re looking to purchase a house in an inexpensive suburb not too far from the CBD, you might find luck in Melbourne’s western suburbs. The cheapest nearby suburb is West Footscray, just a 20-minute drive or 30-minute train commute from to the city, with Footscray coming in second.
It depends on what you’re looking for! There are suburbs great for affordability, some that are great for families, and some rated as being in the nicest neighbourhoods. Overall, the top-rated suburbs for general liveability are South Yarra, East Melbourne, Carlton, Fitzroy North, Hawthorn, Footscray, Travancore, Carlton North, Kooyong, and Collingwood.
There’s no exact answer to a question as complicated as where you should buy an investment property, but you might want to consider suburbs like Melton, Dallas, Officer, Thomastown, and Croydon North. It’s best to consider what you’re looking for and talk to a professional for advice if needed.
Buying a property in Melbourne can be quite competitive, with realestate.com.au showing an average of 271 visits per property. So, you may want to consider using a Melbourne mortgage broker to help you secure a loan. A good mortgage broker in Melbourne will be able to compare hundreds of home loan products to find you the best possible deal.They will also be able to provide you with insights into the Melbourne property market and guide you through to settlement.
Words by Emma Norris
As economic uncertainty clouds us, contact eChoice to discuss the right home loan options for you going forward.
This information is a guide only and is an estimate only based on the past 12 months of aggregated online mortgage enquiries from eChoice and partner programs.
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