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Melbourne Property Market Update January 2024 - By Konrad Bobilak

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Dear Fellow Property Investor,

I realise that Apartments tend to get a bad rap when it comes to property investing. 

And rightly so…many Melbourne suburbs such as Docklands, South Bank, and Melbourne CBD, just to name a few, have proven a complete disaster when it comes to long-term capital growth, with many apartments underperforming the rate of inflation…

But did you know that according to a recent CoreLogic report, Unit [Apartments] values in Blackburn South and Mont Albert in Melbourne’s inner east, Mulgrave, Dandenong North, Noble Park, Springvale and Springvale South in the south-east and Somerville and Frankston South on the Mornington Peninsula have more than tripled in the past 20 years.

Unit prices in Melbourne climbed faster than both Sydney and Brisbane over the past 20 years, increasing by 120 per cent, data from CoreLogic shows. 

Those gains were boosted by strong population growth and lower stock levels in the 2000s.

Sydney’s median unit value increased by 115 per cent, while Brisbane lifted by 81 per cent during the same period.

Underlining Melbourne’s performance over the past two decades, units across 85 per cent of all its suburbs more than doubled in value, while prices in more than 10 suburbs tripled over the same period.

Melbourne suburbs where apartments tripled in value over 20 years revealed! Investors Prime Real Estate

A large chunk of the growth in Melbourne unit values in the past 20 years occurred before and after the GFC with unit values surging more than 20 per cent in 2007 and also in 2009-10, according to CoreLogic.

Let me ask you something…

Do you have a game plan for 2024?

Or will you watch savvy, educated, market-ready investors snap up all the bargains at the bottom of the Melbourne property cycle (which, in my opinion, already bottomed out in November 2022), again?

Or, will you join them?    

So, what are you waiting for?

Reserve your place and join me and 55 like-minded property investors for the first Real Estate Investing Fast Track Weekend for 2024!

Click HERE to reserve your seat now!

Book Real Estate Investing Fast-Track Weekend

Dear Fellow Property Investors,

Australia is facing two more years of house price growth, with two standout markets expected to jump the most, according to a bank expert.

Melbourne and Perth will clock the greatest increases in house prices this year, Bank of Queensland chief economist Peter Munckton found in his new year outlook report.

Depleted listings and few options for buyers will cap how far prices can decline, Munckton wrote in the BOQ's Housing Market Update.

Prices will go up this year but not by the margins seen in 2023, he predicts.

Annual % change standalone house prices. Konrad Bobilak

Munckton is not expecting interest rate cuts until the end of the year. Earlier rate reductions would result in more "aggressive" house price growth, he said.

Price rises will likely continue with gusto in 2025.

"Average house price growth Australia-wide is likely to be lower in 2024 than it was in 2023," he said in the report.

"The lack of new supply puts a floor as to how far house price growth can slow (at least without substantial changes in interest rates or the unemployment rate).

"Stronger house price growth is likely in 2025 as interest rates are reduced and the economic outlook improves."

Domain's latest House Price Report (December 2023), released in January, found record median prices were struck across several capital cities. It has never been more expensive to buy a house or unit in Australia.

At $1,094,539 for houses (up 2.1 per cent over the quarter, or 7.8 per cent over a year) and $638,372 for units (up 2.3 per cent over the quarter and 6.8 per cent over 12 months), the fresh levels inflict further challenges on those striving to get a foot in the market, but reflect capital gains and increased equity for those with mortgages.

Munckton said the bounce of prices in 2023 was a "surprise" to most analysts.

He said the "biggest rise" in standalone house prices in 2024 will be in Melbourne and Perth - markets which he regards as "best value" when comparing rental yield with the level of long-term interest rates.

"Melbourne price performance last year was modest by capital city standards," he wrote.

Let me ask you something…

Do you have a game plan for 2024?

Or will you watch savvy, educated, market-ready investors snap up all the bargains at the bottom of the Melbourne property cycle (which, in my opinion, already bottomed out in November 2022), again?

Or, will you join them?    

So, what are you waiting for?

Reserve your place and join me and 55 like-minded property investors for the first Real Estate Investing Fast Track Weekend for 2024!

Click HERE to reserve your seat now!

Book Real Estate Investing Fast-Track Weekend

Dear Fellow Property Investors,

A handful of Melbourne suburbs recorded double-digit property price increases over 2023, bucking the city’s wider trend of modest growth.

Melbourne’s median house price median rose 2 per cent to $1,047,000 over the 12 months to December, and its unit price grew 4 per cent to almost $580,000 in the same period, the latest Domain House Price Report showed.

In the ever-popular inner north suburb of Fitzroy, however, house prices increased 16.4 per cent to a median $1.63 million last year. Unit prices in neighbouring Fitzroy North also shot up over the year, up 12.5 per cent to nearly $617,000.

Burwood (up 11.9 per cent to $1,411,000) and Maribyrnong (up 11.9 per cent to $1,031,000) had the next highest house price growth, and Notting Hill (10.8 per cent to $385,000) and Bayswater (10.5 per cent to almost $608,000) were the closest for units.

Domain chief of research and economics Dr Nicola Powell said the growth was out of character for Melbourne. “There are a handful of suburbs that have seen double-digit increases and declines, but the bulk of suburbs haven’t seen a lot of movement in the past 12 months,” she said.

Powell said Fitzroy and Fitzroy North had over-performed particularly when compared against blue-chip suburbs which typically lead market movements.

Melbourne suburbs where property prices rose most. Konrad Bobilak

Nelson Alexander agent Jonathan West said sought-after suburbs tended to help boost prices of their neighbours, particularly if they held high-quality homes. Brunswick East, for example, recorded house price growth of 4.3 per cent over 2023 to a median of $1,249,000.

“It’s the connection suburb to Fitzroy North and Carlton North,” West said. “They will start coming out of Carlton North and Fitzroy North and look in Brunswick East to see what’s around, then they’ll hop to Brunswick and Brunswick West if there’s nothing there.”

Brunswick West had less spillover effect, however. House prices there fell 19.8 per cent to $923,000 over the year.

West said the Brunswick West neighbourhood included homes which needed more work, and didn’t attract the same premiums as turnkey properties.

“Brunswick East is more expensive, there’s no doubt about it. With Brunswick West, you get bigger blocks and wider streets,” he said. [The median price] is based on those older style double-fronts that need a lot of work.”

Prices fell the furthest in the unit markets of Clayton South (down 23.2 per cent to $460,000) and St Kilda West (down 20.7 per cent to $486,000), and for houses the biggest drops were in Elwood (down 19.8 per cent to $2,085,000), Brunswick West and Alphington (19.4 per cent to $1.55 million).

Westpac senior economist Jarek Kowcza said the demand for renovated homes was a common trend because of Australia’s high inflation, particularly in the construction sector.

“Properties that are ready for people to move into are really popular,” he said. “The cost of building a new home has been one of the main contributors to inflation.

“So that’s meant the cost of renovating the home has really increased. The availability of staff and materials are also a factor.”

Let me ask you something…

Do you have a game plan for 2024?

Or will you watch savvy, educated, market-ready investors snap up all the bargains at the bottom of the Melbourne property cycle (which, in my opinion, already bottomed out in November 2022), again?

Or, will you join them?    

So, what are you waiting for?

Reserve your place and join me and 55 like-minded property investors for the first Real Estate Investing Fast Track Weekend for 2024!

Click HERE to reserve your seat now!

Book Real Estate Investing Fast-Track Weekend

Dear Fellow Property Investor,

New figures show inflation has slowed to a two-year low of 4.3% leading many to speculate there will be no need for further interest rate rises.

Australian Bureau of Statistics figures for November, show inflation is down from 4.9% in October. This is down from a peak of 8.4% in December 2022.

Graph: Inflation falling as fast as it went up

The Commonwealth Bank is tipping a drop in interest rates of nearly 1 percentage point by the second half of 2024.

CBA chief economist Stephen Halmarick, believes cuts will start in September 2024, dropping rates to 3.6%. He also predicts a further 75 basis point drop in 2025 when inflation sits within the Reserve Bank of Australia’s target of 2% to 3%. This, he says, will bring the cash rate back to 2.85%.

This is excellent news for all property investors as blue-chip inner-city properties located in desirable suburbs will become cash-flow neutral, and in some instances positive!

This aspect of cash-flow positive blue-chip properties will be further accelerated by the current unprecedented increases in rental yields in ‘Key Suburbs’ around Melbourne and Sydney.Imagine, buying a townhouse in Carlton, Yaraville, or St. Kilda and its cash-flow positive from Day 1!

But you have to have the specialised skills and understanding in order to unearth these rare gems?

Let me ask you something…

Do you have a game plan for 2024? 

Or will you watch savvy, educated, market-ready investors snap up all the bargains at the bottom of the Melbourne property cycle (which in my opinion by the way has already bottomed out in November 2022). 

Or will you join them? 

So, what are you waiting for? 

Reserve your place and join me and 55 like-minded property investors for the first Real Estate Investing Fast Track Weekend for 2024!

Click HERE to reserve your seat now!

Dear Fellow Property Investor,

Did you known that despite all the Scaremongering by the largely uneducated media, the Australian real estate market showed defiant resilience in 2023, with combined housing index for all capital cities growing by 8.3% for the year ending 2023!

How dare it!

Index value - National, dwellings

And yes, I must admit that 2023 was a test of resilience for housing values and financial stability more broadly. The performance of the housing market has been stress tested under the pressure of climbing interest rates, stretched affordability and the transition of many mortgage holders from low fixed rates to high variable-rate loans. Home values were not only resilient under these conditions but reached new record highs.

Annual change in home values

But there was definitely no sign of Armageddon or any type of ‘Blood Bath’ in sight!

In fact, many of Melbourne’s top eastern and bayside suburbs stubbornly defied the odds, and performed quite well, with many hitting double digit growth in 2023, according the latest ‘Best of the Best’ December 2023 Report from Core Logic;

Strongest 12 month growth

Now I don’t know about you, but I am happy with a 13.2% annual capital growth appreciation in Murrumbeena…

And guess what, to further negate these doomsdayers, not only did the Melbourne property market refused to crash in 2023, but rental yields surged at an unprecedented levels, in ‘Key Suburbs’, due to a chronic shortage of new stock - and over 1000 developers going bust over the last three years, as a result of the Dan Andrews imposed lockdowns (send him a thank you now for saving our lives from the nasty Bat virus when you get a chance!) …

Let me ask you something…

Do you have a game plan for 2024? 

Or will you watch savvy, educated, market-ready investors snap up all the bargains at the bottom of the Melbourne property cycle (which in my opinion by the way has already bottomed out in November 2022), 

Or will you join them? 

So, what are you waiting for? 

Reserve your place and join me and 55 like-minded property investors for the first Real Estate Investing Fast Track Weekend for 2024!

Click HERE to reserve your seat now!

Dear Fellow Property Investors,

Property values are rising in four out of five suburbs around the country, as the property market upswing broadens despite rising interest rates.

But the pace of growth has started to slow in Sydney and Melbourne, and last week’s interest rate hike casts a cloud over the outlook for the market.

Values rose over the past three months in 83.1 per cent of house markets analysed and 80.6 per cent of unit markets, CoreLogic research found.

Sydney recorded rises in 91.4 per cent of house markets and 87.4 per cent of unit markets over the past three months to October.

The biggest rises were for houses in Five Dock, Oyster Bay, Penshurst, Concord West and Concord, which all gained more than 8 per cent in value in the quarter.

In Melbourne, 80.8 per cent of house markets rose and 75.4 per cent of unit markets rose over the same period.

Table: Where house values are rising

The fastest increases were for houses in Ormond, Hampton East, Kingsbury, Northcote and Thornbury, which rose between 4.4 per cent and 6.7 per cent.

CoreLogic head of research Eliza Owen said prices have been rising despite higher mortgage repayments because there is more demand for housing than supply, as household sizes have reduced since the pandemic and the immigration program has returned.

“Even though there is a lot of pessimism about the state of inflation and weakening economic conditions, there are also a lot of people with the capacity to buy despite higher interest rates,” she said.

“Some of the upsizers who might be participating in the market may have had longer term capital gains they’re able to spend on the next purchase. Wealthier households and cash buyers such as downsizers are able to participate in the market despite rising rates as well.”

Even so, he said Sydney prices have been slowing a bit and Melbourne has lagged relative to elsewhere, while Perth, Brisbane and Adelaide prices stay at record highs.

Auction clearance rates have fallen since autumn, and there is a question mark over the outlook, he said.

“There’s an increasing risk that high interest rates with the still high risk of another hike may start to get the upper hand,” he said.

HSBC chief economist Paul Bloxham said strong population growth, particularly from overseas, was helping to push house prices higher.

Let me ask you something…

Do you have a game plan for 2023 and 2024? 

Or will you watch savvy, educated, market-ready investors snap up all the bargains at the bottom of the Melbourne property cycle (which in my opinion by the way has already bottomed out in November 2022).

Or will you join them? 

So, what are you waiting for? 

Reserve your place and join me and 55 like-minded property investors for the last Real Estate Investing Fast Track Weekend for 2023!

Click HERE to reserve your seat now!

Overseas migration is frequently being called out as one of the primary factors influencing the housing market. In the face of high interest rates, low consumer sentiment and stretched housing affordability, values and rents continue to rise and vacancy rates plummet as net overseas migration has hit record highs.

National home values have increased 7.2% in the year-to-date, and rent values rose 6.0% in the same period. Heated discussions around migration are drawing more focus as housing affordability worsens. But there are many other factors driving values and the rental market, and long term, strategic migration policy should not be influenced by short-term volatility in migration and property markets. This report unpacks five key insights into migration and the housing market.

1. Housing tenure of migrants skew to rentals in the short term.

Fluctuations in overseas migration most immediately impact the rental market, rather than purchases. ABS data on permanent migrant settlement outcomes showed 60.8% of migrant arrivals in the five years to 2021 were renters. The incidence of home ownership was higher among permanent migrants who had been in the country for longer. As of 2021, this included 55.6% of arrivals between 2012 and 2016, and 70.6% of migrant arrivals before 2012 (figure 1).

Figure 1. Portion of permanent migrants renting or owning a dwelling, by year of arrival in Australia

Permanent migrants renting

For temporary migrants, 68.9% of temporary migrants 15 years and older were renters in 2021. This included 91.6% of temporary skilled visa holders, and 83.5% of student visa holders.

2. Part of the reason migration is so high right now is because it was temporarily restricted.

Australia closed its borders to all non-citizens and non-residents in late March 2020, and fully re-opened to vaccinated and non-vaccinated arrivals in July 2022. By March 2023, Australia’s annual population growth hit 2.17%, the highest rate since 2008. Net overseas migration, which is overseas arrivals minus departures[1], is currently at record highs annually, at 454,000 added to the population in the past 12 months. The pre-COVID decade average of annual net overseas migration is 217,000.

Figure 2a. Net overseas migration, rolling annual, Australia

Figure 2b.Overseas arrivals and departures, rolling annual, Australia
Graph - Overseas arrivals and departures

Assuming the average household size of 2.49 people per dwelling in January this year, the year to March would have seen demand for around 182,000 additional dwellings, in a year when around 175,000 dwellings were completed. That’s not to mention new household formation domestically, as young Australians move out, buy first homes, or start their own families. Domestic household formation has increased substantially in recent years amid a reduction in average household size.

The bottom line is that this phenomenon of record-high overseas migration numbers will add substantial pressure on rents increasing in the major capital cities as well as pressure on capital growth increases in the housing sector. 

Let me ask you something…

Do you have a game plan for 2023 and 2024? 

Or will you watch savvy, educated, market-ready investors snap up all the bargains at the bottom of the Melbourne property cycle (which in my opinion by the way has already bottomed out in November 2022).

Or will you join them? 

So, what are you waiting for? 

Reserve your place and join me and 55 like-minded property investors for the last Real Estate Investing Fast Track Weekend for 2023!

Click HERE to reserve your seat now!

Dear Fellow Property Investor,

New figures show significant growth in Brisbane, Adelaide and Perth with many suburbs seeing increases of more than 15% and Sydney up by 7.5%!

Australia’s property prices have soared to record levels in several capital cities as limited sales volumes and rising populations more than made up for the dampening effect of higher interest rates, two data groups say.

The new figures show significant growth in Brisbane, Adelaide, and in Perth, where five areas have recorded annual gains of more than 15%, while prices in Sydney are 7.51% higher than a year ago.

Overall, national home prices crept 0.36% higher in October, bringing the rise to just under 5% for 2023, according to PropTrack. Sydney, Perth, Adelaide and Brisbane values are all at record peaks.

Annual change in home prices

“We’ve seen national prices have now risen for 10 consecutive months,” PropTrack’s senior economist, Eleanor Creagh, said. “It’s certainly a daunting increase for someone [who’s] yet to enter the market.”

Rival data provider CoreLogic said its national home value index rose 0.9% in October alone, accelerating from September’s revised 0.7%. The 7.6% increase from a trough in January left the index just 0.5% below the peak recorded in April 2022, the group said, citing slightly different tracking methods.

“There’s an increasing diversity of capital growth performance,” the head of residential research at CoreLogic, Eliza Owen, said.

“Sydney and Melbourne are loosening up a little bit. Hobart, Darwin and Canberra have been flat or falling in recent months and remain down quite substantially year-on-year,” Owen said. “But then when you look at Brisbane, Adelaide and Perth – those cities are performing quite differently with [price] growth trending at over 1% a month, inventory levels very low, values at peak, and showing little sign of slowing down.”

The rise in property values during 2023 has caught many analysts by surprise, given the Reserve Bank has been lifting interest rates at the fastest pace in three decades including four rate rises in 2023 before a pause in past four months.

For many people housing is their biggest asset. When home prices fall, it tends to dim households’ sense of wealth, cooling their spending, a trend the RBA had been factoring into their economic models.

With most economists now predicting another interest rate rise next Tuesday, CoreLogic and PropTrack expect some of the real estate fizz to diminish.

“I think the re-acceleration in housing [price] growth might be short-lived, given the increasing prospects for a rate rise next week,” Owen said.

A revival in new listings – including a 10.7% rise in Melbourne and 9.3% in Sydney since the start of spring – will also put a brake on the pace of price gains in some markets, she said. A renewed drop in prices can’t be ruled out.

“New listings added to the market across Sydney in the past three months is about 23,000 properties as opposed to 21,000 sales,” Owen said. “The supply/demand position is shifting.”

Creagh said other cities such as Perth, Brisbane and Adelaide may take a lot more to slow them down.

Home prices in the Western Australian capital rose 0.52% alone in October, a 16th month in a row of gains, and are now 10.9% higher than a year earlier. Rental vacancies are less than 1% and landlords average just 16 days to rent out a property.

Top 10 Greater Melbourne suburbs with the highest 12 month value growth

Let me ask you something…

Do you have a game plan for 2023 and 2024? 

Or will you watch savvy, educated, market-ready investors snap up all the bargains at the bottom of the Melbourne property cycle (which in my opinion by the way has already bottomed out in November 2022), 

Or will you join them? 

So, what are you waiting for? 

Reserve your place and join me and 55 like-minded property investors for the last Real Estate Investing Fast Track Weekend for 2023!

Click HERE to reserve your seat now!

Dear Fellow Property Investor,

Did you know that an extra 60,000 homes will be built in 10 established Melbourne suburbs with existing public transport connections and retail options?

Victoria's Planning Minister Sonya Kilkenny said authorities would introduce planning controls by the end of next year to allow for more dwellings to be built.

Areas chosen are Broadmeadows, Camberwell Junction, Chadstone, Epping, Frankston, Moorabbin, Niddrie (Keilor Road), North Essendon, Preston (High Street) and Ringwood, tender documents from the Victorian Planning Authority show.

"They've been selected because of their strategic significance and their potential to deliver more homes in areas that are really well serviced by transport, by services, they're well connected," Ms Kilkenny told reporters on Tuesday.

The documents do not reveal the estimated costs of building the homes or when they are set to be completed. 

They do reveal the 10 initial areas will guide investment in community infrastructure with the total number of 'activity centres' expected to increase to 120. 

Chadstone, home to one of the southern hemisphere's largest shopping centers, has a bus interchange but does not have a train station or access to trams.

The commitment to build 60,000 new homes in those 10 suburbs is part of the government's housing statement unveiled by former premier Daniel Andrews.

So what are the implications of all this with respect to the future Capital Growth Potential of these 10 suburbs?

And will these changes, and more specifically an increase of future stock have a positive outcome on prices?

Find out by attending the upcoming Melbourne Real Estate Investing Fast Track weekend now!

Click HERE to reserve your seat now!

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