Melbourne is set to continue as one of the strongest-performing property markets in Australia due to its booming population growth rate.
Blogger: Paul Bennion, managing director, DEPPRO
ABS figures show that Melbourne recorded the biggest population growth rate of any capital city in Australia last financial year, with its population increasing by 2.1 per cent.
This is not a one-off; over the past 10 years, Melbourne’s average population growth rate has also been 2.1 per cent per annum.
In sheer numbers, Melbourne’s population jumped by over 91,000 persons last financial year, which represents an additional 1,750 people living in the city every week.
This surge in population has led to upward pressure in property prices in Melbourne, with house prices jumping by 8.3 per cent over the past year to $713,000.
Over the last decade, the median price of a house in Melbourne has jumped by over $300,000, whereas many other capital city property prices have remained flat.
While the current residential building boom in the city is helping to moderate this price growth through greater supply, the outlook for the Melbourne property market still remains very positive for investors.
In particular, the city is attracting large numbers of interstate and overseas migrants because of the strong fundamentals underpinning its economy, creating many new job opportunities.
This influx of people is set to continue and will create demand for new homes.
Currently, more than 20 per cent of all tax depreciation reports undertaken by our Melbourne office are for investors who live outside Victoria.
These astute investors are buying for the long term, and our office has found a surge in investor activity in key parts of the city following the publication of the Victorian government’s long-term strategy ‘Plan Melbourne’.
Plan Melbourne aims to deliver 1.57 million new homes by 2051, of which 1.04 million will be higher density and the remaining 530,000 will be traditional stand-alone houses.
This long-term strategy means that there will be greater urban infill in the more established areas of Melbourne.
For example, Plan Melbourne has a target of identifying underutilised land surrounding train stations such as North Richmond, which can be redeveloped into new residential/commercial areas.
Property investors are taking advantage of these growing opportunities in the Melbourne market and, as a result, our company is now undertaking tax depreciation reports for clients who have purchased established properties in near-city areas that will lend themselves to future redevelopment.
Investors have also been very active in the Melbourne apartment sector, which has offered a more affordable entry point into this booming property market.
The median price of a unit/apartment in Melbourne is now nearly $200,000 lower than the price of a traditional house.
Units and apartments now account for more than 50 per cent of all tax depreciation reports our company undertakes for property investors in Melbourne.