Melbourne Property Stats

Why invest in Melbourne and or Victoria

Victoria Population Growth 2016

Property doomsayers predicted Melbourne to be the worst performing city and Victoria to be the worst performing State in Australia.    WRONG and if you continue to listen to the so called ‘experts’ …


“More homes required for Melbourne’s growing population!”

63,000 new dwellings required per year over the next 35 years !

 Victoria in the Future 2016 blog here


Figures and Statistics – September 2016

Melbourne home values rose by +14.2% over past 12 months, this strong market performance is underpinned by the strong population growth Melbourne is undergoing with around 1,400 new residents every week and on the back of a sound economy which is creating new jobs

Australian Bureau of Statistics 30 March 2016 “Melbourne our fastest-growing Capital, population growth of 2.1% in 2014/15, now an estimated 4.44 million residents in Greater Melbourne.”

Revised to 10 million residents by 2051 requiring 2.2 million new dwellings with a growth of 108,000 in the year to last June!

According to new figures released by the Victorian government, Victoria is the fastest growing state in Australia and our population is expected to rise to over 10 million by 2051. The report on Victoria’s population and household projections to 2051, Victoria in Future 2016, indicates upward trends in migration, birth rates and life expectancy. No Australian city has experienced growth of this scale before changing Melbourne forever.

“The figures show strong population growth across the state will continue,” said Danni Addison, Victorian Chief Executive of the Urban Development Institute of Australia.

“Melbourne’s population is set to double within 15 years, meaning we need new housing to accommodate the growth” … can you now see your investment potential?

Australia’s fastest growth city with Geelong in second place with only 4 cities outside of Victoria being Gold Coast, the Sunshine Coast, Brisbane and Sydney taking the balance of the growth.

Population Growth places upward pressure on housing supply and pricing. Affordability is affected but current owners benefit

Migration the main factor with 3 in every 8 residents settling into Melbourne or inner Victoria, ie. 75% of the nations population growth is coming into Victoria. In the year to June 138,000 new residents settled into Victoria. The migration boom is transforming the city with the second wave of large-scale migration primarily from India and China expecting to continue well into the future

Renewed population growth will also come from Victoria’s high Gen Y’s in their 20’s and 30’s adding to the highest birth rate in Australia suggesting a lot of babies will be born here in the next 15 to 20 years adding to the increase of the new wave of population growth breaking over Victoria/Melbourne

Effective Infrastructure Planning requires major review and investment to provide services for this growing population. Adequate planning and approvals for new dwellings (estimated at over 65,000 per annum) needs to be provided and built to house this population as every suburb within 10km of the core now has more people living in it than there were 2, 3 or 5 years ago. An astounding statistic you would agree

The Bureau estimates refute claims that Melbourne’s growth is concentrated in a few areas. Of 66 suburbs or groups of suburbs it identifies within 10km of the city, all but nine grew by at least 10 per cent in the decade – and 26 grew by at least 20 per cent. That trend has been under way for some time, and is now accelerating. Since 1991, the inner area of Melbourne has added about 300,000 people, increasing its population by 40 per cent

Just over half the growth in the past decade took place in suburbs more than 20 kilometres from the GPO. The Bureau’s estimates show a growing proportion of it is in outer western and northern suburbs such as Point Cook, Craigieburn and South Morang, but with the south-eastern tail still wagging strongly in Cranbourne and Pakenham

For homebuyers, that’s where the affordable housing is, and they have no choice but to accept higher transport costs and travel times as the price of being able to own their own home. Transport infrastructure requires major investment to service both inner Melbourne and outer Melbourne Suburbs taking residents to their place of work and play

 

Did you know “as Melbourne’s population grows our apartment market matures. Demand for apartments within the inner and middle suburbs is inevitable. Property constantly adjusts to establish a healthy balance between supply and demand.”

Download full report here

Victoria 10 million residents by 2031 read here


Economic Indicators

Certain regional locations in Victoria and certain suburbs in Melbourne are far from flat and certainly higher all round than this time last year :

  • Population growth in Melbourne highest in Australia and up by 95,700 residents
  • Victoria’s Economic growth increasing by an average of 2.4% annually over last 10 years to June 2014
    • Retail spend also below national average of 2.9% being 0.8%
    • Victoria is a mid-sized economy larger than Singapore, New Zealand and most of South East Asia
    • Providing for 22% of Australia’s total GDP

     

    Property Indicators

  • Annual growth rate for Australian Property of  13.9% for the year to end May 2016 (CoreLogic RP Data)

    • 14.2% to end Sept 2016 and another 9.1% to end Oct 2016
  • Melbourne median house price has breached the $700k mark sitting at $725,000 for past quarter
  • Building approvals highest in the nation
  • The average discount achieved in June 2013 was 6.6%
    • June 2012 was 7.7%
  • The average days stock sat on the market in June was 95 days
    • June 2012 similar 94 days
  • Home Loan applications up 4% (national avg 2.5%)
  • Investor loans up 2% (national avg 9.7%)
    • meaning more investment property secured in other states
  • The amount of property available in June was 41,000
    • June 2012 had 11% less property available
  • Prices in 2013 have increased on average by 5% or 6% depending on whose figures are accurate
    • RP Data 3.3% on houses and 4.2% on units
    • APM 6.1%  on houses and 4.2% on units
    • REIV show 8.4% on houses
  • Median house price growth in 2013 (last 12 moths) as per APM figures per suburb, the avearage annual growth in Median House prices as per APM is from 8%  in the inner East up to 11.8% in the far South Eastern Suburbs
    • Outer lying South Eastern 1.9%
    • Inner South Eastern 3.5%
    • Inner North 3.7%
    • North Eastern 5.4%
    • Inner East 6%
    • Inner Western 7.2%
    • Inner City 7.3%
    • outer Eastern Suburbs highest performer at 9.3%
  • The worst capital growth rates in Melbourne over the past 10 years (on property below $1 mil) Regional towns continue to outperform inner Melbourne Suburbs
    • Docklands 2.3% (inner West)
    • Parkville 2.4% (inner North)
    • East Melbourne 3.1% (inner East)
    • Heatherton 3.2% (far SE)
    • North Warrandyte 3.4% (mid NW)
    • Carlton 3.5% (inner North)
    • West Melbourne 3.7% (inner North)
    • Caulfield 3.8% (inner SE)
    • Mernda 3.8% (inner SE)
    • Point Cook 3.8% (mid SW)

 

 Summary : No indication of any property boom, indicators towards steady consistant moderate improvements; higher growth and higher rental yields in Regional Victoria preferably on a Rail Link, over inner Melbourne suburbs

 

Most asked question is, “Should I invest in a House or an Apartment?”

 

Driven by affordability, preferences, low ongoing maintenance, close proximity to work and lifestyle choice … most people prefer to live withing 8 – 10km of a CBD.

With median house prices as high as they are in these inner suburbs, the affordability of the majority lies within being able to Rent or Own a property valued between $350,000 to $550,000

Leaving little choice but to occupy an Apartment. High competition for the same dwelling leads to stronger capital growth and increased rental yields within this high competition belt

The old addage of Land improves in value whilst buildings depreciate is no longer applicable in most world cities based on the above

 RENT : although there is a significant difference in House Prices compared to Apartments in the inner suburbs, there is a far stronger rental yield on apartments over homes giving the investor a significantly higher return on their investment over the period one holds the property!

 

Houses

  • Median house price $725,000
  • Median house rent $400 pw, a small percentage of the population can afford to own a home or rent a home in the inner suburbs
    • (same as an apartment meaning a lower rental yield is achieved)
  • Less competition equates to lower rental yields
  • Less competition results in lower capital growth
  • The adage of land appreciates and buildings depreciate is no longer applicable today

Apartments

  • Demand for apartments has increased significantly with 4 out of every 10 new dwellings being built are apartments
  • Median Apartment price $525,000
  • Median apartment rent $370 pw, the majority of people want to live close to the CBD for convenience and lifestyle
    • (same as a house meaning a better rental yield on an apartment)
  • The affordability of these people leaves them with little choice but to buy a unit or apartment / or to rent a unit or apartment
  • This is the category of property where competition is at an all time high
  • Hence higher rental yields
  • Hence firm capital growth opportunities

Around 4 out of 10 new dwellings (39%) being built are now apartments, around university campuses and hospitals this number goes up

Rental Vacancy Rates in inner Melbourne have increased overall to 2.9%  :   Southbank 8.9%;  Docklands 7.6%;   CBD 6.5% based on SQM Research data 2013

 

Where not to Invest

Inner CBD, Docklands, Southbank

  • Potential Oversupply in above CBD precinct
    • with 25,500 new inner city apartments to be completed by end 2013
    • 23,325 new apartments approved to March 2013
  • currently being marketed off the plan 35,700 apartments in 300 developments
  • high vacancy rates only set to increase currently 6.5% in CBD, 7.6% Docklands and 8.9% Southbank

    • Melbourne average is 2.9% vacancy rates on apartments
  • resultant affect is a lowering of rent to ensure your apartment is rented out at all costs
  • very high competition to rent or sell your apartment as your target audience is low
  • resulting in investors not achieving much capital growth in years to come
    • don’t be sucked in by offerings of Rental Guarantees, Rebates or free Furnishings

 

Where to Invest

  • Inner North and inner West suburbs
  • better priced per square meter
  • within close proximity to the CBD
  • that are on Train and or Tram Lines
  • which are currently undergoing gentrification
  • experiencing population growth
  • have received or will receive government investment and or industry investment
  • could include inner suburbs such as :
    • Northcote, Preston, Thornbury, Coburg and around to Yarraville and Maribyrnong, Carnegie, Bentleigh, East Bentleigh, Caulfield
    • do your own due diligence (this is not advice)

 

Regional Victoria

Did you know that suburbs or towns with rail links continue to outperform those without?

  • Average Growth Rates in Australia
    • On Tram route 6.2%
    • On Train route 6.4%
    • With both Train and Tram 6.3%
      • No train 5.7%
  • On a property valued at $500k, at a difference of 6.4% over a 10 year period
    • this equates to a difference of almost $64,000 better off

 

Regional Victoria continues to astound the so called property experts by often outperforming inner Melbourne Suburbs in both Capital Growth and also Rental Yields + lower vacancies

What to look for are regional towns that :

  • Experiencing steady population growth
  • Has multi-faceted economies
  • National business located within the town
  • New job creation or a short commute to other job nodes
  • On train lines direct to Melbourne providing safe and quicker commutes
  • Attracting new industries and or new head offices
  • Has motorways or new motor links saving commuting time
  • Have investment into
    • Infrastructure (Hospitals, Education (school, tafe or uni), rail and road
    • New industries (manufacturing and or service)
  • Being an alternative lifestyle to Melbourne
  • Has affordable housing and lifestyle but easy access to job nodes
  • Undergoing extensive property development
  • Self sustaining population not relient on any one industry to keep it’s economy alive in difficult times
  • Significant investment by Industry and or Government

 

 Why consider the following Investment Opportunities

Affordable, Lifestyle, Location, Infrastructure, Popoulation Growth, Job market / Employment node,  strong Demand and higher Rental Yields

Bendigo

  • Alternative lifestyle to what Melbourne offers
  • Large national companies
  • Relative close proximity to Melbourne
  • Will be closer with the new $5bn Regional Rail Link directly into the centre of Melbourne ensuring quick and safe commutes
  • Quality highway to Melbourne
  • Affordable housing and lifestyle
  • New Hospital Project valued $630 mil
  • New residential projects
  • Other new infrastructure and retail development
  • Growing population sitting at 100,000

A substantial city with population growth plus a multi faceted economy with an affordable lifestyle and good proximity to Melbourne

Ballarat

  • Median house price mid $200,000’s
  • Growing population sitting at 96,000
  • Alternative lifestyle to what Melbourne offers
  • Affordable housing and lifestyle
  • Strong rental returns
  • Will benefit from the $5bn Regional Rail Link
  • Quality highway link to Melbourne
  • Strong education centre
    • 2 x Universities
    • TAFE
    • Government and Private Schools
  • Wind Farms
  • Recognised Cancer Hospital
  • Diverse Economy with national companies

    • including new IBM Information Tech Hub

A substantial city with population growth plus a multi faceted economy with an affordable lifestyle and good proximity to Melbourne

Geelong

  • Quality alternative lifestyle to what Melbourne offers
  • Highly affordable housing and lifestyle on the Bellerine Peninsula
  • Lifestyle includes immediate access to the bay and very near to surf beaches
  • $5 bn new Regional Rail Link project
  • New Geelong Ring Road saving commute times
  • Upgrade to Avalon Airport on the cards to become a second international airport
  • Multi-faceted growing economy
  • Strong Education industry

Geelong in the past was very reliant on car manufacturing yet today is a stronger having a variety of industries successfully underpinning its economy thus less exposed to the likes of Ford closures – also new Rail Link will improve commute times to Melbourne or other job nodes

 

Sale

  • Median house price mid $270,000
  • Very affordable housing plus quality lifestyle in close proximity to wave beaches
  • Growing job market
  • Growth regional centre for East Gippsland area – nearby to Bairnsdale and Paynesville
  • Average capital growth 8% pa for last 10 years, could accelerate with new industries coming on board
  • $1.1bn Gas Processing Plant just outside of Sale
  • $65 mil TAFE Campus attracting lecturers, students and employees
  • $185 mil Royal Australian Airforce expansion
  • Growing population located 280km east of Melbourne

About to command more attention with the imminent launch of the massive ($4.4 bn BHP Bass Strait Gas Project) processing plant in Sale. History shows that major infrastructure announcements and commencement of these projects reflects strongly in capital growth and increased rental yields

Albury Wodonga

  • Made up of 2 cities on either side of the Murray river where both cities have proactive and strong councils attracting business into the area
  • Has a growing population
  • Attracted International and National Businesses
  • Strategically located between Victoria and NSW and close enough to 3 major cities being Sydney, Canberra & Melbourne
  • New industry and infrastructure projects
  • Major Woolworths distribution centre and other logistic centres due to strategic location
  • Varied industries including defense, tourism, ATO, government administration services, etc
  • Affordable lifestyle
  • Very affordable homes median price early $300’s
  • Stronger than average rental yields around 6 – 7%
  • New residential property development

Spurred on by strategic location (NSW & Vic) with easy access to Canberra, Sydney or Melbourne by road or rail.  A growing population and economic diversity of the local economy, with a quality lifestyle and affordable homes

Berwick

  • Median House price at an affordable $450,000
  • Average growth rate 6.5% achieving steady growth every year for last 10 years
  • Low vacancy rate of 2%
  • Located alongside the upgraded Monash Freeway
  • Having both government and private hospitals
    • Casey Government
    • New Private hospital project
  • Strong Education
    • Private and government schools
    • TAFE campus
    • Monash University

Berwick offers the opportunity where Hospitals and Universities are clustered together providing immense job opportunity in the area putting pressure on demand for accommodation by students, employees, lecturers and medical staff

Frankston

  • Median House price $330,000 in Frankston South and $260,000 in North Frankston
  • Efficient rail links to CBD
  • Free flowing motorway link to Melbourne on the Monash freeway
  • New Peninsula Link improving commute times
  • Close to Hastings which will undergo a massive port upgrade
  • A very affordable Bayside Lifestyle
  • Capital growth around 7%
  • New projects in infrastructure and housing close to being launched – upgrade to Hastings Port

    • Hastings could become a major port for Melbourne which will positively impact on the whole Mornington Peninsula
  • Frankston is the centre of manufacturing/industrial activities and attracts a wide business market into Frankston

An under rated  good performer in the Melbourne market

Epping LGA

  • Suburbs include : Epping, Lalor, South Morang, Craigieburn and Thomastown
  • Median house price early $300,000’s
  • Rail link to Melbourne including upgrade to join South Morang to the network
  • Upgrade to motorway link
  • Hospital expansion project
  • New fruit and vegetable markets
  • New job opportunities in the area
  • Strong population growth into these northern suburbs
  • Multiple job node opportunities
  • Located on the Western Ring Road and the Hume Freeway
  • Attracting tenants to new Industrial Parks in the region creating jobs
  • Strong retail precincts such as Epping Plaza

Current future potential based on new growth and new housing estates being affordable, located on train links with easy access to Melbourne via freeways or local job opportunities on the back of Industry Expansion

Waurn Ponds

  • Regional Geelong
  • Affordable housing
  • Median house price $460,000
  • Serviced by  Geelong Ring Road
  • Has a successful Deakin University Campus in high demand
  • Solid median house growth averaging 7% over the last 3 years
    • 11% growth in past 12 months
  • New $65 mil major retail project

Affordable housing in close proximity to Geelong and the Geelong Ring Road having all the advantages that Geelong residents receive

 

“Where ever one chooses to Invest, an investor (or owner occupier needs to undertake their own due diligence and be selective as growth is not evenly spread across Melbourne metropolitan or regional areas”

 

Investment Property Fundamentals 1 … more

Investment Property Fundamentals 2 … more

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