Key Melbourne Areas Continue To Perform

Posted on 28/07/2016  
Key Melbourne Areas Continue To Perform

Strong buyer competition in key areas of the Melbourne market, coupled with lower levels of stock available, is continuing to drive prices higher.

But buyers need to be highly selective about what and where they buy. Leading buyers agent Miriam Sandkuhler says fewer than 10% of properties in the market have the right fundamentals to perform consistently over the medium to long term.

Sandkuhler, founder of Property Mavens, says buyer activity across the Melbourne metropolitan area has generally slowed, but quality suburbs within 20km of the CBD continue to hum with strong interest from both home-buyers and investors.

“Previously, there was some nervousness about the Federal Election and Brexit, but that seems to have passed,” she says. “There was a slowdown in lending approvals for investors earlier in the year, but that has rebounded more recently.

“In key areas where investors are focused there is a lot of competition, but with much lower levels of stock available. In the suburbs where I’m buying for my clients, the stock levels are 30% to 40% down on the same time last year. That puts pressure on prices in suburbs where there’s consistently high demand.”

Sandkuhler says evidence of the tight market is being seen in agents switching from the usual four-week marketing campaigns to three-week campaigns to capitalise on the faster results being achieved.

But, notwithstanding the ongoing buoyancy in the market, buyers need to be careful about what they buy and where they buy.

“You have to be very selective,” she says. “It has to be more than the right suburb - you have to drill down to find the best street. You also need to focus on the fundamentals of the property itself, such as the right floor plan and the right aspect - the finer details that matter to a future owner-occupier buyer.

“Between 5-8% of properties have the right fundamentals, which means the right combination of location, high land value, good floor plan, parking and other features.”

Suburbs showing good value for houses in the inner western suburbs include Newport, Kingsville, West Footscray, Seddon and Spotswood.

In the north-west, Sandkuhler says areas like  Ascot Vale, Moonee Ponds and Flemington, as well as some areas further out such as Essendon  - but buyers need to be selective.

In the north, rapidly-gentrifying areas like Reservoir and Coburg have seen prices rise dramatically, but selected opportunities remain.

Another major area of focus is the eastern suburbs 10-20km from the CBD, particularly Ashburton, Burwood and Glen Waverley.

In the bayside and south-eastern suburbs, Sandkuhler recommends avoiding the “trophy house” areas such as Brighton, focusing instead on Ripponlea and parts of Highett.

Sandkuhler has added her voice to warnings about Melbourne inner-city apartments. “People are still very naïve about the consequences of buying that kind of property in areas like the CBD, Docklands and South Bank,” she says. “Many of the new apartments are small, poorly-designed and lack scarcity value, while the market is destined for oversupply.

“Buying off the plan in those areas is asking for trouble.”

But apartment buyers can still find good value in established properties in low-rise blocks in the inner-city suburbs – with an emphasis on small boutique blocks of eight or ten units.

“Buyers need to check out who the majority owners are. They should be primarily owner-occupiers because they are more likely to spend money to look after the property. Investors should be highly selective in targeting two-bedroom units with the right floor plan and parking. Being within walking distance of trams and trains is a key point also.”

Sandkuhler believes Melbourne will continue to out-perform as a market, boosted by the highest population growth and the best-performing jobs market in the country, as well as affordable price levels relative to Sydney.

“We are now getting a lot of inquiry from Sydney investors and are helping them to buy here,” she says.

 

 

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