Market Report
Property Market Report: July 2024
26 July 2024
by Dee Pajevikj
The grass is always greener on the other side of the country. One hears people talk of the wonders of the Sydney market, the Brisbane market, the Perth market. But the Melbourne property market has performed almost equally to those other over the last two years, and holds greater room for future improvement than those further afield. More pertinent than comparing Melbourne to other, distant, real estate markets is to compare it to alternative investments such as shares, bonds and gold, all of which it has easily outperformed.
We are nearing, or at, the bottom of a cycle and these are good times to invest in real estate, and it is the perfect time to invest.
Perhaps counterintuitively, the Melbourne market’s slower growth has left the market with more potential increase and produced sumptuous prospects for switched-on property investors. The average value of Melbourne houses as compared to Sydney houses is as low as it has been for two decades, creating huge investment potential, particularly in the more affluent streets of the suburbs such as Stonnington and Boroondara. At Abercrombys we are advising our clients not to wait for an interest rate fall before investing, because this is likely involve you in a stampede of like-minded wait-and-see types bidding you to prices you’d rather not pay. Get in before the crowd.
Spring is approaching, infusing new life and new hope into the market. The sound of lawnmowers will soon wake us on the weekend. And spring never fails to bring buoyancy to the psyche of investors and thus to the market. People are returning from overseas and focusing on their investments. You can’t ski in The Alps forever. The young are back at school. The longer days bring with them optimism, as well as a determination to bid bravely – all enhanced this year by the excitement surrounding the Olympics.
As well, at Abercrombys we have observed that long-term investors, and developers, are back in the market looking to elevate their level of investment. They have recognized this moment as the bottom of the market and are making their moves. This has meant that blue ribbon and investment quality homes, and suburbs, have been outperforming others. A-grade homes are experiencing strong demand, while lesser properties are taking a little longer to sell.
Melbourne’s rapidly growing population has caused unprecedented demand for rental properties and an alarming undersupply of stock. Across Melbourne vacancy rates in the rental market are exceptionally low by historical standards. Industry experts report vacancy rates at 1.5%, but in the blue ribbon suburbs that figure might be too high.
Demand being way out front of supply always creates a bidding war, and rental prices have risen accordingly. There is much understandable angst on the part of renters, who are queuing and missing out, and paying more than seems fair for properties they once wouldn’t have considered. It is a distressing time for many renters, a hard market to enter. But the market is a model of amoral efficiency because it is powered by countless folk making self-interested decisions, and what might be bad news for some is generally good news for others. And these are great days to be a lessor. At present there’s no having to endure the anxiety of an empty investment property, nor are landlords suffering the anguish of properties that don’t pay their way.
Melbourne’s rapidly growing population has caused unprecedented demand for rental properties and an alarming (To some.) undersupply of stock. Across Melbourne vacancy rates in the rental market are exceptionally low by historical standards. Industry experts report vacancy rates at 1.5%, but in the blue ribbon suburbs that figure might be too high.
Demand being way out front of supply always creates a surplus of tenants for one property (creating a dilemma), and rental prices have risen accordingly. There is much understandable angst on the part of renters, who are queuing and missing out, and paying more than seems fair for properties they once wouldn’t have considered. But the market is a model of amoral efficiency because it is powered by countless folk making self-interested decisions, and what might be bad news for some is generally good news for others. And these are great days to be a lessor. Increases in rental yields have been both incessant and substantial. At present there’s no having to endure the anxiety of an empty investment property, nor are landlords suffering the anguish of properties that don’t pay their way. Investing in a rental property then, would seem a no-brainer.