– The overall Melbourne residential market has increased in the middle eastern and south eastern suburbs such as Camberwell, Burwood, Balwyn, Doncaster, Glen Waverley and Wantirna.
– The market is currently experiencing strengthening conditions with moderate to strong price growth achieved due to increased buyer interest.
– Purchaser interest has been influenced by the current low interest rates and high clearance rates which have created a confident, positive market.
– In volume terms, owner-occupier demand is pretty steady.
– The interest in purchasing property has grown among average owner- occupiers who are looking for a primary place of residence.
– Owner-occupier purchasers also consider the size of the property, their marital status, occupancy and income in order to find a suitable property to meet their needs.
– Despite recent property growth, in the current market, the average buyer is looking to purchase a detached house on a decent site due to potential capital growth via the possible land value increase.
– In June 2014, best performing suburbs in middle eastern and south eastern suburbs were Mitcham and Burwood with respective quarterly changes of 13.2% and 7.1% for houses.
– Due to popularity and current high demand in these areas, developers continue to subdivide established land and build new dwellings to increase density across these neighbourhoods.
– Most properties are located in quiet residential streets with local views and within 15 to 30 kilometres of the Melbourne Central Business District.
– The median price for houses in the area is around $700,000 and it has increased in part due to availability of sought after primary and secondary schools in the area.
– In terms of investors, they are looking for properties to create greater returns in rent payments or capital growth.
– The Australian Bureau of Statistics released housing finance data for July 2014 with the investment finance commitment increasing by 6.8%.
– In the current climate, investors are occupying the majority of housing finance demand. – Compared to owner-occupied purchasers, investors consider not only location and local infrastructure but also the property growth history and comparable rental properties on the market to maximise returns and minimise risks.
– With returns on safe asset classes extremely low, many investors are purchasing property in Melbourne’s safe suburbs such as Wantirna. – Statistics indicate that 79% of Wantirna properties are owner-occupied with a recent decline in the number of sales. – According to RP Data, Wantirna had only 89 house sales and 17 unit sales in 2014 compared to the previous year of 154 and 33 sales respectively.
– However, with the property sector growth, Wantirna has undergone some redevelopment changes and subdivided sites into two and three unit developments are becoming more common.
– According to the REIV, Wantirna’s house values have grown by 10% in the quarter ending June 2014 compared to March 2014 and the current median price in the area is $672,250 for houses and $472,000 for units
– Property values are continuing to rise due to increased competition for housing driven in part by population growth. – However, at some point in the future, demand will slow as purchasers are no longer able to afford the homes available for sale and future growth in values will slow while interest rates will most likely increase.
– Furthermore, the current market shows a very strong supply-side response with a high number of dwelling approvals over the past 12 months.
– Additional supply could slow price increases and release the pressure from rising values.
– The housing market has generally provided solid capital gains over the past decade with growth conditions across Melbourne currently strong, however the market moves in cycles and the growth being seen in Melbourne will eventually slow and soften.
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Thanks to Therese from Alphabroker