Why Metro Melbourne presents as a "Cheapie With Prospects": Hotspotting's Terry Ryder
The City of Melbourne is one of the top five most affordable local government areas to buy property in with significant investment upside.
That's the view of researcher and commentator Terry Ryder, founder of Hotspotting.com.au, a company which helps identify emerging property markets.
He listed the City of Melbourne in his top five 'City Cheapies with Prospects' alongside the City of Salisbury in Adelaide, the City of Armadale and the City of Canning in Perth, Southern Moreton Bay Islands in South East Queensland.
He says the five regions are likely to offer the best strategic property buying and investing potential over the next six months. Melbourne's population boom, overtaking Sydney as Australia's largest city for the first time in more than a century after borders were redrawn, was a major factor in Ryder's view.
“Despite facing challenges during the pandemic, Melbourne has shown resilience and stability in its property market," Ryder says.
“However, the rising interest rates and shifting lifestyle demands have caused investors and homeowners to look at options such as units and townhouses instead of standalone houses.”
The City of Melbourne, with its high-density dwellings making up 86 per cent of homes, has become an attractive destination for both living and working, he said.
“Its strong economy, with major businesses, universities, hospitals, and government services, has been further bolstered by ongoing infrastructure projects such as the North East Rail Link and the proposed Suburban Rail Loop,” Ryder said.
“These developments are expected to bring in significant investments and create thousands of jobs, ensuring continued growth and stability in Melbourne's property market.”
Melbourne saw the fastest growth in dwelling values of all Australian capital cities at the start of the pandemic, but then saw the steepest decline when repeated lock downs curtailed market activity in 2020- 21.
Since 2021 however, Melbourne has been one of the more resilient of the capital cities nationally, and has performed relatively steadily against a backdrop of rising interest rates and reduced consumer confidence.
According to the latest Home Value Index from CoreLogic, released in August 2023, median dwelling values in Melbourne behaved relatively moderately compared to other Australian capital cities such as Sydney and Brisbane. Dwelling prices rose less rapidly in Melbourne between the onset of Covid to the cyclical price peak. However the subsequent decline in dwelling values in 2022-2023 was also much more moderate.
Ryder says there is an emerging trend of more buyers opting to buy units and townhouses, for affordability and lifestyle reasons, including young buyers and downsizers.
"It’s creating rising demand in inner-city locations in the biggest cities.
"The City of Melbourne is benefiting from this trend, with only 1.8% of the LGA’s population living in detached housing, according to the last census. 12.2% live in medium density and 85.3% living in high density accommodation."
Hotspotting's Spring 2023 edition of The Price Predictor Index stated the City of Melbourne is the strongest market in the Greater Melbourne area.
"Of the 10 City of Melbourne suburbs in the analysis, seven are rising markets, one is a recovering market and one is a consistency market (and one is a plateau market)," the report noted.
According to Hotspotting’s Top 10 Apartment Markets report, published in August 2023, apartments were outperforming standalone houses in a number of ways – including faster growth in rents, superior price growth rates for much of the past 12 months and a growing share of new dwelling approvals.
In the latest State of the States report, from July 2023, Victoria leads the country for construction work done. According to the data, in Victoria, construction work done is 19.3 per cent above its decade average.
City of Melbourne, Metro Melbourne, Highlights
• Strong population growth
• Good rental yields
• Designated Metropolitan Activity Centres
• Important national cluster of universities and hospitals
• $35 billion Suburban Rail Loop
• $16 billion North East Link
• $14 billion biomedical precinct
• $6.7 billion Docklands development
• $2.8 billion Melbourne Square project
• $1.7 billion Southbank Arts precinct