Though Victoria is delivering consistent price gains, there are signs of weakness in the Melbourne market.
After Sydney, Melbourne is one of the country’s fastest growing markets. According to RP Data, the Melbourne median price has increased by 11.6 per cent over the past 12 months. The ABS, meanwhile, records price growth at 12.4 per cent.
However, there is some discrepancy in pricing data. According to SQM’s advertised price index, the 12 month growth rate for Melbourne comes in at only two per cent. SQM’s Louis Christopher theorises that a large portion of Melbourne properties are advertised without a price tag, skewing the results.
Indeed, Melbourne currently has the country’s most active auction market, according to Australian Property Monitors, with clearance rates in the low 70s throughout April.
In the first quarter of 2014, Melbourne suburbs were among the fastest growing in Australia, onethehouse.com.au reports. The median house price in Alphington, in the city’s north-east, increased by 8.65 per cent over the past three months. For units, Balwyn and Box Hill stood out for their rapid price increases of 6.33 per cent and 6.23 per cent respectively.
However, closer to the city, the unit market in Melbourne is fairly soft. Terry Ryder from Hotspotting.com.au cautions that investors should avoid this market segment. He called the high vacancy rate “dangerous”, particularly as new projects for apartments in inner-Melbourne are still in the works. In his view, a high portion of overseas investors are purchasing in the CBD, causing a distortion in the price of these properties.
With the federal government committing to a $1 billion dollar investment in the East-West Link project, LJ Hooker suggests Melbourne’s outer western suburbs are gaining an edge. The company predicts the roadway will make the suburbs more accessible and act as a catalyst for development.
Further out, regional Victoria is continuing to make steady gains. The state government recently predicted the regional population would increase by 57 per cent by 2050, with the largest changes expected in Geelong, Ballarat and Bendigo.
The town of Mildura on the New South Wales border was named the most affordable regional town in Australia for units by RP Data. According to their analysis, investors in this region can pick up a townhouse for a median price of $148,005.
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