Melbourne and VIC
June 2015 Market Update Region by Region
Overview
Taking time to assess ‘where you’re at’ is a valuable use of your minutes. By pausing and evaluating what’s happened in the past, you’re often more prepared to tackle the hurdles ahead. This month we’ve used the excuse of June’s mid-year position to reflect upon the first half of 2015 in property markets. Each of our offices has handed in their scorecard on how real estate is performing in their area, and the results are compelling.
Melbourne
The Melbourne residential property market is performing well across the board and is described by many property analysts as hot. Units do not seem to be reaching the same levels of growth in some areas, however this can be explained by an oversupply in the market.
The overall positivity within the residential market in Melbourne can be attributed to many macroeconomic drivers including the low interest rates, increased foreign investment, population growth and job security.
A specific market sale that typifies the positivity of the Melbourne residential property market occurred on 22 April 2015 when 55 Waltham Street, Flemington was sold at auction. This property set a suburban record, selling for $2.9 million. The two level, double fronted, Victorian dwelling hosting 286 square metres of living area, comprises 4-bedrooms, 3-bathrooms, swimming pool and a separate studio. The property is situated on an above average 974 square metres of land within the heart of Flemington.
Foreign investment is one of the drivers in the current Melbourne market. Chinese buyers are especially active and heavily involved in the eastern suburban, prestige and off the plan property markets. The suburbs being impacted heavily are Doncaster, Balwyn and Templestowe. It is the financial backing of some of these foreign investors that is keeping local buyers out of the market. Chinese investors are competing against one another and are battling it out to enter any of these markets at above market level costs.
This impacts the consistency of sale prices, making it particularly difficult to determine what the true market levels in some areas are. Foreign investment has encouraged greater inner city high-rise development, which has subsequently exposed a glut in supply of off-the-plan apartments. This is evident particularly within inner city suburbs such as Southbank and Melbourne’s CBD.
Population growth is another major contributor to the property market performing well. Victoria’s current annual growth rate is 1.77%. This growth is typically occurring on the outskirts of Melbourne in newer suburbs such as Craigieburn, Point Cook and Mernda.
Consider the suburbs of Northcote, Essendon and Carnegie as examples to gauge current market performance. The price point for all three suburbs is medium to high. The main demographic is quite similar, the majority being professional couples, some with children and generally in the medium to high income earnings bracket.
Housing in Northcote is excelling. Median house prices rose 4.2% for the quarter to reflect a median sale price of $943,000. Units are remaining flat or even declining slightly. The median sale price declined 1.81% for the quarter to $487,500. Northcote’s popularity can be attributed to many factors such as being seven kilometres from the CBD and access to extensive public transport, Northcote Shopping Plaza and High Street retail strip.
The high demand for housing in this area has forced entry- level prices to rise. Last year entry level buyers could afford partially updated properties in Northcote.
The increase in value has forced them into buying houses in original condition.
Another trend in the Northcote housing market is investors and owner- occupiers starting to pay more for unrenovated original properties, preferring to do the renovation themselves rather than buying an already updated property. A sale of note is 41 Union Street, Northcote which sold for $1,003,000 on 28 February 2015.
This property is a single fronted Victorian gutted shell, meaning the purchaser is buying the skeleton of the property and is happy to renovate and extend themselves. Therefore this price is very close to land value, reflecting a rate of $2,500 per square metre, proving that the gap between original and updated house prices in Northcote is closing as purchasers pay a premium for un-renovated dwellings.
Essendon is another suburb that is performing remarkably well.
Both housing and apartment markets are strong. House values are steadily increasing at a yearly rate of 9.25% to a $915,000 median price. Units also rose 5.39% for the year to a median of $459,500. The Essendon DFO shopping centre, Buckley Street shopping strip and train line are contributors to the popularity of this suburb.
Essendon has shown a higher rate of interstate investors within the suburb alongside strong local investment. This is due to many factors including its further distance from the CBD and moderate level of boutique low rise / low density apartments in contrast to Northcote’s higher density apartment market. You are far more likely to see local agencies (e.g. Pennisi Real Estate, Raine&Horne) on the contract than the development firm behind the marketing campaign.
Another suburb we have found interesting to watch this financial year has been Carnegie situated within the City of Glen Eira. This suburb has reflected an impressive 7.19% capital growth for the year in the residential housing market.
We saw the highest median sales prices over the past three years at $1,277,500 in March 2015. We predict this is due to the suburb’s increased popularity due to the strong investment in retail outlets such as Officeworks, Spotlight and the all-round convenience of Carnegie Central. Carnegie also has five major parklands throughout the four kilometre radius of the suburb reflecting close to 7% of the total suburban land area according to CoreLogic RPData.
Overall, we have witnessed strong and positive market performance throughout 2015 providing hope for continued growth for the next six months.
Foreign investment has been particularly strong in the Melbourne CBD and inner city suburbs, impacting the consistency of apartment sales within these areas as we struggle to find off-the-plan sales meeting the current market range.
This investment is predicted to continue strongly over the next year especially while the RBA cash rate remains low at 2%.
Murray Riverina
It’s a bit better than “steady as she goes” on the residential front in Echuca/Moama with some segments flat in the standard slightly older housing areas and some more modern dwellings tight on supply which is pushing up prices, particularly in Moama. The big shift in the past six months has been the increase in supply of land in Echuca and Moama and this has seen most of the building providers particularly busy as they look to keep up with building demand.
Gippsland
The Sale area in general continues to be steady, with well presented and well priced properties selling well. Low interest rates are also motivating buyers, in particular first home buyers in the $200,000 to $300,000 price bracket. The expansion of the Exxon Mobil gas plant at Longford continues to drive rental demand in the area, with asking rental prices increasing as a result. Agents in the smaller regional townships of Maffra and Stratford are also reporting increased buyer enquiry and higher sale prices than the previous quarter.
Latrobe
After a surprising increase in market activity over late 2014 into 2015, the market has slowed slightly with agents looking for listings. Prices remain steady with no major fluctuations in the past 12 months. Housing is seen as affordable. Building should increase in Traralgon with greater residential subdivisions available. The Sale rental market is relatively strong.
Overall prices are steady, so it might be a good time to invest!
Baw Baw Shire (Warragul/Drouin)
The Warragul/Drouin area saw an increase in sales in the first half of 2015. Waterford Rise and other developments in the area are selling at a steady rate however there has been no noticeable increase in market values to date. The predominant buyer in this area is older or establishing families.
East Gippsland
The East Gippsland residential market continues to be subdued with demand and prices showing no signs of recovery. Having said that the most active markets for dwellings are $200,000 to $250,000 for new buyers and investors in Bairnsdale, Lakes Entrance and Paynesville.
The stock levels are reduced, however prices have yet to show signs of growth. Sales upwards of $300,000 in Bairnsdale are low in volume with the demand here probably being satisfied by new builds in the Shannon Waters and Eastwood developments. It looks like the market has yet to respond to the recent reductions in interest rates and with the lack of growth in values in the area it is uncertain when the dampened investor and second home buyer market sentiment will improve.
Phillip Island
Phillip Island comprises a number of small coastal townships comprising residential property for owner occupiers and holiday rentals. Agents have reported that the first half of 2015 has seen the most number of sales and an increase in enquiries for several years. This is yet to have a noticeable upward effect on prices in this locality.
The most notable sale was a waterfront property in Sunderland Bay comprising a 640 square metre vacant lot with ocean views which is currently under offer for $535,000. Vacant land with ocean frontage or views is rare in this locality.
South Gippsland
The market has been steady in South Gippsland localities with an increase in both enquiries and sales. This is yet to result in an increase in market values. The best performing area in this locality is Inverloch which comprises an owner occupier market and a large, established holiday rental market.
Mildura
The residential market in Mildura continues to move along at a brisk pace. Agents are reporting good levels of enquiry and marketing periods are relatively short. Values appear to have improved by around 5% to 10% in the past twelve months. The most active segment is owner occupiers looking for good standard homes in the $250,000 to $450,000 bracket. We have also seen strong demand for the limited number of subdivisions recently completed, with vacant lots typically selling for around 15% to 20% more than in 2013.
Rental vacancy rates remain at close to zero and combined with low interest rates, is resulting in an active investor market. Both owner occupiers and investors continue to show a preference for better standard homes and buyer activity remains slow in the sub $200,000 market.
The first half of the year is generally pretty busy in terms of real estate activity, with the number of homes being placed on the market generally slowing down as the weather cools.
Data supplied by HTW
June 2015 Market Update Region by Region
Overview
Taking time to assess ‘where you’re at’ is a valuable use of your minutes. By pausing and evaluating what’s happened in the past, you’re often more prepared to tackle the hurdles ahead. This month we’ve used the excuse of June’s mid-year position to reflect upon the first half of 2015 in property markets. Each of our offices has handed in their scorecard on how real estate is performing in their area, and the results are compelling.
Melbourne
The Melbourne residential property market is performing well across the board and is described by many property analysts as hot. Units do not seem to be reaching the same levels of growth in some areas, however this can be explained by an oversupply in the market.
The overall positivity within the residential market in Melbourne can be attributed to many macroeconomic drivers including the low interest rates, increased foreign investment, population growth and job security.
A specific market sale that typifies the positivity of the Melbourne residential property market occurred on 22 April 2015 when 55 Waltham Street, Flemington was sold at auction. This property set a suburban record, selling for $2.9 million. The two level, double fronted, Victorian dwelling hosting 286 square metres of living area, comprises 4-bedrooms, 3-bathrooms, swimming pool and a separate studio. The property is situated on an above average 974 square metres of land within the heart of Flemington.
Foreign investment is one of the drivers in the current Melbourne market. Chinese buyers are especially active and heavily involved in the eastern suburban, prestige and off the plan property markets. The suburbs being impacted heavily are Doncaster, Balwyn and Templestowe. It is the financial backing of some of these foreign investors that is keeping local buyers out of the market. Chinese investors are competing against one another and are battling it out to enter any of these markets at above market level costs.
This impacts the consistency of sale prices, making it particularly difficult to determine what the true market levels in some areas are. Foreign investment has encouraged greater inner city high-rise development, which has subsequently exposed a glut in supply of off-the-plan apartments. This is evident particularly within inner city suburbs such as Southbank and Melbourne’s CBD.
Population growth is another major contributor to the property market performing well. Victoria’s current annual growth rate is 1.77%. This growth is typically occurring on the outskirts of Melbourne in newer suburbs such as Craigieburn, Point Cook and Mernda.
Consider the suburbs of Northcote, Essendon and Carnegie as examples to gauge current market performance. The price point for all three suburbs is medium to high. The main demographic is quite similar, the majority being professional couples, some with children and generally in the medium to high income earnings bracket.
Housing in Northcote is excelling. Median house prices rose 4.2% for the quarter to reflect a median sale price of $943,000. Units are remaining flat or even declining slightly. The median sale price declined 1.81% for the quarter to $487,500. Northcote’s popularity can be attributed to many factors such as being seven kilometres from the CBD and access to extensive public transport, Northcote Shopping Plaza and High Street retail strip.
The high demand for housing in this area has forced entry- level prices to rise. Last year entry level buyers could afford partially updated properties in Northcote.
The increase in value has forced them into buying houses in original condition.
Another trend in the Northcote housing market is investors and owner- occupiers starting to pay more for unrenovated original properties, preferring to do the renovation themselves rather than buying an already updated property. A sale of note is 41 Union Street, Northcote which sold for $1,003,000 on 28 February 2015.
This property is a single fronted Victorian gutted shell, meaning the purchaser is buying the skeleton of the property and is happy to renovate and extend themselves. Therefore this price is very close to land value, reflecting a rate of $2,500 per square metre, proving that the gap between original and updated house prices in Northcote is closing as purchasers pay a premium for un-renovated dwellings.
Essendon is another suburb that is performing remarkably well.
Both housing and apartment markets are strong. House values are steadily increasing at a yearly rate of 9.25% to a $915,000 median price. Units also rose 5.39% for the year to a median of $459,500. The Essendon DFO shopping centre, Buckley Street shopping strip and train line are contributors to the popularity of this suburb.
Essendon has shown a higher rate of interstate investors within the suburb alongside strong local investment. This is due to many factors including its further distance from the CBD and moderate level of boutique low rise / low density apartments in contrast to Northcote’s higher density apartment market. You are far more likely to see local agencies (e.g. Pennisi Real Estate, Raine&Horne) on the contract than the development firm behind the marketing campaign.
Another suburb we have found interesting to watch this financial year has been Carnegie situated within the City of Glen Eira. This suburb has reflected an impressive 7.19% capital growth for the year in the residential housing market.
We saw the highest median sales prices over the past three years at $1,277,500 in March 2015. We predict this is due to the suburb’s increased popularity due to the strong investment in retail outlets such as Officeworks, Spotlight and the all-round convenience of Carnegie Central. Carnegie also has five major parklands throughout the four kilometre radius of the suburb reflecting close to 7% of the total suburban land area according to CoreLogic RPData.
Overall, we have witnessed strong and positive market performance throughout 2015 providing hope for continued growth for the next six months.
Foreign investment has been particularly strong in the Melbourne CBD and inner city suburbs, impacting the consistency of apartment sales within these areas as we struggle to find off-the-plan sales meeting the current market range.
This investment is predicted to continue strongly over the next year especially while the RBA cash rate remains low at 2%.
Murray Riverina
It’s a bit better than “steady as she goes” on the residential front in Echuca/Moama with some segments flat in the standard slightly older housing areas and some more modern dwellings tight on supply which is pushing up prices, particularly in Moama. The big shift in the past six months has been the increase in supply of land in Echuca and Moama and this has seen most of the building providers particularly busy as they look to keep up with building demand.
Gippsland
The Sale area in general continues to be steady, with well presented and well priced properties selling well. Low interest rates are also motivating buyers, in particular first home buyers in the $200,000 to $300,000 price bracket. The expansion of the Exxon Mobil gas plant at Longford continues to drive rental demand in the area, with asking rental prices increasing as a result. Agents in the smaller regional townships of Maffra and Stratford are also reporting increased buyer enquiry and higher sale prices than the previous quarter.
Latrobe
After a surprising increase in market activity over late 2014 into 2015, the market has slowed slightly with agents looking for listings. Prices remain steady with no major fluctuations in the past 12 months. Housing is seen as affordable. Building should increase in Traralgon with greater residential subdivisions available. The Sale rental market is relatively strong.
Overall prices are steady, so it might be a good time to invest!
Baw Baw Shire (Warragul/Drouin)
The Warragul/Drouin area saw an increase in sales in the first half of 2015. Waterford Rise and other developments in the area are selling at a steady rate however there has been no noticeable increase in market values to date. The predominant buyer in this area is older or establishing families.
East Gippsland
The East Gippsland residential market continues to be subdued with demand and prices showing no signs of recovery. Having said that the most active markets for dwellings are $200,000 to $250,000 for new buyers and investors in Bairnsdale, Lakes Entrance and Paynesville.
The stock levels are reduced, however prices have yet to show signs of growth. Sales upwards of $300,000 in Bairnsdale are low in volume with the demand here probably being satisfied by new builds in the Shannon Waters and Eastwood developments. It looks like the market has yet to respond to the recent reductions in interest rates and with the lack of growth in values in the area it is uncertain when the dampened investor and second home buyer market sentiment will improve.
Phillip Island
Phillip Island comprises a number of small coastal townships comprising residential property for owner occupiers and holiday rentals. Agents have reported that the first half of 2015 has seen the most number of sales and an increase in enquiries for several years. This is yet to have a noticeable upward effect on prices in this locality.
The most notable sale was a waterfront property in Sunderland Bay comprising a 640 square metre vacant lot with ocean views which is currently under offer for $535,000. Vacant land with ocean frontage or views is rare in this locality.
South Gippsland
The market has been steady in South Gippsland localities with an increase in both enquiries and sales. This is yet to result in an increase in market values. The best performing area in this locality is Inverloch which comprises an owner occupier market and a large, established holiday rental market.
Mildura
The residential market in Mildura continues to move along at a brisk pace. Agents are reporting good levels of enquiry and marketing periods are relatively short. Values appear to have improved by around 5% to 10% in the past twelve months. The most active segment is owner occupiers looking for good standard homes in the $250,000 to $450,000 bracket. We have also seen strong demand for the limited number of subdivisions recently completed, with vacant lots typically selling for around 15% to 20% more than in 2013.
Rental vacancy rates remain at close to zero and combined with low interest rates, is resulting in an active investor market. Both owner occupiers and investors continue to show a preference for better standard homes and buyer activity remains slow in the sub $200,000 market.
The first half of the year is generally pretty busy in terms of real estate activity, with the number of homes being placed on the market generally slowing down as the weather cools.
Data supplied by HTW
