Melbourne Property Market, For Investors, Notes From July

1. Melb follows Sydney – commentators say Melb is bound to catch up historically – and it still outperformed all capitals in the long term except Sydney

House price growth over the past three decades

2. Vacancy rates under control and quite tight, generally well under 3%

3. Rental surge in high Owner Occupier locations

4. Affordability - 3-4 bdr houses within 30 kms of CBD for under $700k. Yields approaching 6%

5. Sustained demand in Melb - large pop and growing fast, steady migration, diverse economy, world class infrastructure ($120B pipeline for Melb)

Melb Reasons for growth:

• Affordability that still exists (for now)
• Infrastructure already under construction with commitments to more projects (~$120B)
• Tightening land and planning policy [although standard development got a huge boost!]
• New buyers re-entering the market – tied to more affordability and lowering interest rates.

What to consider:

• Rental yields trail behind Perth and parts of regional Qld
• Melb market fits a long term strategy
• Growth not universal - not all parts of Melb will perform equally
• Factor in annual land tax - for $600k 0.2%, so use $650-$1200 pa or ~$20 pw

Suburb checklist:

• Tight vacancy rates
• Good infrastructure
• Strong future demand
• A high mix of OOs (values skew to stable areas)