Fundamentals part2

Investment Property Melbourne

Required Fundamentals underpinning property have never been so strong!

Property prices in Australia are on the increase due to the following strong fundamentals

  • Property pricing strengthening on the back of …
    • Recovering and secure Economy.
    • Strong Banking Industry.
    • Continued Population Growth.
    • Migration into Melbourne is currently at 1750 people per week – record levels of population growth experienced nationally at over 2% per annum.
    • Aging Population of baby boomers who need to boost their retirement funds through investing in property.
    • House prices to high for local Australians to purchase who want to own in the market resulting in the :
      • Purchase of a smaller unit or
      • Purchase an apartment.
      • Or purchasing an investment in an area they can afford to buy in, but chose to rent in the area they wish to reside in.
  • Investors have come back strongly into the market
    • To purchase now at today’s price.
    • Insufficient supply of housing available now.
    • Very High Demand vs Total Under supply of accommodation.
    • Trend to continue with more migration and immigration.
    • Trend of lack of supply will continue as the building industry cannot catch up to the demand.
    • Australian Dollar strong!
    • Your currency devaluation against the Aussie Dollar, possibly sending you behind the 8th ball as they say.
    • For 10% now, secure property at today’s price.
    • High demand for Property within 8 to 10km of CBD and spreading outwards due to affordability issues.
    • The Australian system to purchase a property (for the majority of purchases) is through an Auction.
    • Resulting in :
      • Emotional purchasers bidding against each other just to secure a property are inflating property prices.
      • Emotional purchasers are out bidding the astute investor who, in today’s economy, should secure at least a 5% rental yield.
        • There is an alternative to buying off auction and that is through private listings / sales.
        • No auctions, no bidding wars, no emotions … your decision will be based on the numbers.
        • Landlords achieving record Rental Returns, and predicted to strengthen as interest rates increase.
          • Melbourne rents increased by 12.7% in the last 12 months.
          • Rental Vacancy Rates at a historical low of less than 1% (occupancy rates at a high of 99%).
          • Capital Appreciation at unprecedented growth rate of 18.3% in Melbourne during the last 12 months.
          • Investing in property today has not in our lifetimes presented a more opportune time to do so.

Summary Reminder

  1. Victorian Government 2030 plan.
    • Increased population from 5.4 million up to.
    • This growth is planned to stimulate the Victorian Economy.
    • Melbourne will become a larger city than Sydney.
    • In 2030 there will be a shortage of an estimated 300,000 dwellings.
    • Developers, builders and financial institutions are unable to keep up with the excessive demand.
    • The economic principle of supply vs. demand will underpin the current value of property ensuring continued capital appreciation.
    1. The Current shortage of accommodation will evolve into Higher Rentals being achieved which are currently sitting at record highs.
    2. Current construction levels are below what they have been in previous years. With no solution to keep up!
    3. For more info on Melbourne 2030 click here

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  1. How will Melbourne absorb another 1 million residents? « invstmentpropertyaustralia - September 16, 2011

    […] economy and an infrastructure see Why Melbourne and also the Fundamentals of Melbourne part 1 and part 2 then make a […]

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