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The outer suburbs of Melbourne have become a focal point for property investors, as the quest for growth potential moves away from the inner city regions that have driven Melbourne\u2019s median property price to almost $1 million.<\/p>\n
The outer suburbs of Melbourne have become a focal point for property investors, as the quest for growth potential moves away from the inner city regions that have driven Melbourne\u2019s median property price to almost $1 million.<\/p>\n
Buyer surveys by Melbourne real estate agents RPM Group show the proportion of purchasers being investors almost doubled from 16 per cent during the HomeBuilder period (June 2020 to March 2021) to 31 per cent from April to October this year.\u00a0<\/p>\n
First home buyers as a proportion of owner-occupier purchasers declined over the same two periods, from 69 per cent to 54 per cent.\u00a0<\/p>\n
RPM Group managing director Luke Kelly said outer Melbourne was set to benefit from its relative affordability advantage, with new home demand supported by the pandemic-induced shift towards low density, larger homes that can accommodate a study, more storage space, and outdoor areas.<\/p>\n
The numbers told the story, he said.<\/p>\n
\u201cThe affordability advantage new house and land packages have over established dwellings has widened significantly over the last year, evident after stronger annual median price growth in September quarter 2021 of 24.8 per cent for Melbourne houses compared to 6.7 per cent for Melbourne vacant lots,\u201d Mr Kelly said.<\/p>\n
\u201cAs a result, Melbourne\u2019s median lot price constituted just 30 per cent of Melbourne\u2019s median house price at September quarter 2021, below the long term ratio of 35 per cent, which signifies house and land packages are currently undervalued compared to established dwellings.\u201d<\/p>\n
Alex Fitzgerald, a national acquisitions manager for Custodian responsible for finding land in Victoria\u2019s growth areas to provide investment opportunities for clients, said there were still opportunities to secure affordable property within the greater metropolitan area.<\/p>\n
Ms Fitzgerald said there are still pockets where capital growth is all but guaranteed and within a reasonable commute from the Melbourne CBD.\u00a0<\/p>\n
She singled out Melton<\/a> and Wyndham City Council areas as locations with excellent growth prospects.<\/p>\n \u201cThe Wyndham local government area is only a 35 kilometre ring from the city centre, or about a 35 minute drive,\u201d she said.\u00a0<\/p>\n \u201cIts population is forecast to grow by 69 per cent in the next 20 years, or close to 10,500 people every year, and a 400 square metre block of land is on average about $330,000.\u00a0<\/p>\n \u201cIt\u2019s a similar story with Melton, which is in a 38 kilometre ring from the CBD, or a 45-minute commute, and its population is expected to swell by 141 per cent within the next 30 years.\u00a0<\/p>\n \u201cYou can purchase a 400 square metre block there for on average $310,000 and both Wyndham and Melton have consistently ranked in the top five fastest growing council areas in Victoria.\u201d\u00a0<\/p>\n Mr Kelly said the move towards partial working from home arrangements had reduced the desire of people to live as close as possible to the Melbourne CBD.\u00a0<\/p>\n \u201cThis is boosting demand for new homes in peri\u2013urban areas such as Sunbury<\/a>, Beveridge<\/a>\/Wallan<\/a>, Bacchus Marsh<\/a>, and Warragal<\/a>\/Drouin<\/a> and regional cities such as Geelong<\/a>, Ballarat<\/a> and Bendigo<\/a>,\u201d he said.<\/p>\n Mr Kelly said there is scope for further lot price growth to come through, particularly as borrowing costs currently remain around historical low levels.\u00a0<\/p>\n \u201cDemand is outpacing supply, resulting in the number of lots remaining unsold at the end of a month continuing to diminish through 2021, which is applying further upward pressure on lot prices.\u201d<\/p>\n Bargains still existed in the middle ring suburbs, according to David Kobritz, managing director at DealCorp.<\/p>\n Just 14 kilometres from Melbourne city centre and the home of a community sports complex, regional park, private hospital and a range of public and private schools, the median house price in Bundoora<\/a> has been on an upward trajectory over the last 10 years, increasing from $485,000 in 2012 to $830,000 today.<\/p>\n \u201cMelbourne\u2019s outer and middle north has seen a surge in interest from families and young professionals looking to trade crowded cities for a COVID-driven tree change,\u201d Mr Kobritz said.\u00a0<\/p>\n \u201cWe\u2019ll likely see this trend continue with the return of international students in 2022 and taking into consideration Bundoora\u2019s relative affordability for a mid-suburban location in Melbourne.\u201d\u00a0<\/p>\n Growing pains<\/strong><\/p>\n All signs point to Melbourne\u2019s population growing rapidly in the coming years.<\/p>\n International students will inevitably return in large numbers and specialist real estate agencies with international offices are reporting growing interest from buyers in mainland China, Hong Kong, Singapore and the UK.\u00a0<\/p>\n Melbourne\u2019s deputy lord mayor Nicholas Reece recently called for an increase in the nation\u2019s annual migration intake from 160,000 to 300,000, welcoming a \u201cmassive wave of new immigrants to help get the city back on track\u201d.<\/p>\n But with such expansion comes inevitable growing pains.<\/p>\n