As we head towards the holidays, it’s a good time to take stock of the Melbourne property market. How did it perform this year? Were sales strong? Did your real estate’s value go up as much as you hoped it would?
Property values: A quiet end to a bumper 2016
The CoreLogic RP Data Hedonic Home Value Index recorded a 1.5 per cent drop in Melbourne’s median home value over November, but this was a slight dip on an otherwise strong year. Median values were up 11.3 per cent on an annual basis, bested only by Sydney at 13.1 per cent.
This was primarily focused on houses in Melbourne, which grew by 12.2 per cent – units only experienced 3.9 per cent growth throughout 2016.
The best-performing suburbs for value growth
The Real Estate Institute of Victoria (REIV) has highlighted that the price growth in Melbourne over 2016 – which has now cracked the $740,000 mark for the first time ever – hasn’t necessarily been concentrated in any one particular area. The inner, middle and outer regions of the city have all seen significant growth.
However, there are still some outstanding contenders. Richmond saw double-digit growth, for example, and many of the top-performing suburbs are located in the city’s north and west, reports the REIV.
Anyone that has bought property in these areas is likely to have seen a huge boost in their value over the last few years, setting them up with a healthy amount of equity – the perfect leveraging tool if you want to purchase an investment, or simply downsize and pocket the difference.
Sales volume and supply: High concentration in the east
Further research from CoreLogic RP Data highlighted the council areas across Australia with the highest number of sales in 2016, with many parts of Melbourne leading the way. Eastern suburbs seem to be proving popular, though sales figures continue to tick along nicely throughout the entirety of Melbourne.
Despite this, listings are down on 2015 levels. SQM Research data from October showed that with 35,778 homes on the market, Melbourne had 10.4 per cent fewer properties on the market than the same time last year.
Looking at what homes are actually coming to market, it seems we are entering the age of the apartment. CoreLogic RP Data research indicates that as of August this year, 48.9 per cent of all listings were units. A year before, that figure was 42 per cent. Another year back, it was 40.4 per cent.
This high supply may be what is keeping growth in units down – although strong migration levels could increase demand in 2017.
Melbourne’s best suburbs to watch in 2017
Despite concerns about unit supply, the year in Melbourne real estate has been overwhelmingly positive. A much lower entry price point than Sydney, strong migration and comparable value growth suggests sales will continue to flourish in 2017 as people begin to view themselves as priced out of the NSW capital.
In terms of where to look for growth in 2017, schools could be your focus.
In terms of where to look for growth in 2017, schools could be your focus. As we covered earlier this year, in suburbs like Parkville, the difference between being in a catchment zone and being outside one can be as much as $600,000.
With everything looking good for the property market here in inner north Melbourne and beyond, we’re excited about what 2017 will bring, and hope you are too. If you’re ready to start putting property plans into action, get in touch with your local Nelson Alexander office today.