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

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)