Step aside, Sydney—Melbourne’s real estate sector has been hot on your heels for some time now, and new figures reveal it is continuing to march its way towards becoming Australia’s fastest-growing property market.
The latest data from the Real Estate Institute of Victoria (REIV) reveals that Melbourne’s median house price has skyrocketed past three quarters of a million dollars, to reach a new record high of $770,000.
This figure represents an increase of 5 per cent in the three months to December 31 2016, while units jumped up 3 per cent across the same timeframe, reaching a new median of $563,500.
Most impressively, growth was consistent across the state, with annual price increases recorded in both regional and metropolitan markets throughout Victoria:
|Metro Melbourne||Dec-16 Quarter||Quarterly Change||Annual Change|
|Inner Melbourne||Dec-16 Quarter||Quarterly Change||Annual Change|
|Middle Melbourne||Dec-16 Quarter||Quarterly Change||Annual Change|
|Outer Melbourne||Dec-16 Quarter||Quarterly Change||Annual Change|
|Regional Victoria||Dec-16 Quarter||Quarterly Change||Annual Change|
* Source: REIV. Annual change is based on rolling annual figures.
If you’re keen to buy into the Victorian property market and you’re encouraged by these promising quarterly and annual growth rates, you may be eagerly browsing our classifieds to find your next home or investment property.
Before you get too invested in the idea of owning your own slice of Victoria, it’s important to understand the risks present in the market at present.
Right now, many industry insiders believe that Melbourne (and Brisbane) are at risk of oversupply, specifically in the apartment market.
In a recent survey by comparison website Finder, an overwhelming majority of 26 housing experts and economists surveyed said they believe there is an oversupply of apartments in these two cities.
Of those experts surveyed, 75% agreed that there are too many apartments in Melbourne.
Despite these concerns, which many in the industry have been voicing for some time, Victoria broke a record for the highest level of building approvals in September 2016. A recent report by the Commonwealth Bank suggest shows that construction work in Victoria in the most recent quarter up by 16.6 per cent on ‘normal’ levels, while Victorian starts are 20.1 per cent above decade averages.
Does this mean you should avoid buying Melbourne apartments altogether? Not necessarily.
Research from Angie Zigomanis at BIS Shrapnel has found that in inner Melbourne areas—such as Southbank, Docklands and the CBD—more than 50% of new apartments re-sales since 2011 were selling for less than the original purchase price.
To some investors, this might indicate that the market is bottoming out and is therefore ripe for the picking. To others, it could be a sign that they should steer clear of Melbourne’s apartment market for the foreseeable future.
You need to do your own research so you can come to a conclusion you’re comfortable with, while also getting to know what your goals are. Do you want to find a home to move into it? Do you want to invest in a starter property to eventually leverage into a bigger house? Or are you opting to sink your funds into an investment that delivers a profit from day one?
Once you know exactly what you’re aiming to achieve, you can start evaluating opportunities within Melbourne’s property market to see whether they align with your goals.