Why Melbourne’s short-term sputter shouldn’t scare investors
Buyers who may be hesitating to invest in Melbourne after the past tumultuous two years should make sure they’re taking a long view, according to one market expert.
Pete Wargent, co-founder of buyer’s agent marketplace BuyersBuyers, said that the economic conditions imposed by COVID-19 had clouded the Victorian capital’s investment potential.
To continue reading the rest of this article, please log in.
Create free account to get unlimited news articles and more!
“Investors and homebuyers should not become too confused by the short-term impacts of border closures and remote work. Melbourne has become a global city, and its long-term economic growth and population projections are extremely strong,” Mr Wargent said.
“The employment market in Melbourne is also in robust condition, with a very low unemployment rate, strong job vacancies, and very good projections over the coming years. This, in turn, will attract a large number of migrants to the city as soon as the border restrictions are fully removed,” he predicted.
In his view, now might be the right time to buy, given that the substantial impact of the pandemic on Melbourne has meant the city has lagged behind its usual main competitor for growth.
“Houses in Melbourne are now substantially more affordable than those in Sydney,” Mr Wargent said.
BuyersBuyers chief executive Doron Peleg added that if the city’s population increases keep steady, its real estate landscape will be in for some changes.
“Over the long run, we can expect to see the population of Greater Melbourne rise towards 9 million by the middle of the century. Naturally, this will drive an increase in population density over time, and there will be increasing pressure on land values in popular suburbs with strong access to amenities and employment hubs,” Mr Peleg said.
The remote work revolution may have changed some aspects of Australians’ attitudes toward living in the capital cities, but Mr Peleg said that he believes workers will ultimately stay heavily concentrated in metropolitan areas.
“While there has been some change in working arrangements over the past two years, the bulk of higher-paying professional and executive roles will still be based in Sydney and Melbourne,” Mr Peleg commented.
And according to Mr Wargent, the shifting rental landscape will also make its mark on the city’s prospects for buying before the year is out.
“Overall, buyers of houses in Melbourne should look through the short-term noise. With borders reopening, rental markets will be very tight for houses in 2022, and rising rents tend to shift the buy versus rent equation towards purchases,” he said.
“The long-term fundamentals for houses in Melbourne are among the strongest in Australia, so buyers should have this front of mind, as opportunities abound.”
