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Melbourne Property Market Update January 2024 - By Konrad Bobilak

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Don’t miss out, CLICK HERE to get up to date video education from Konrad Bobilak.

Right Now In 2023, The Melbourne Property Market Is Experiencing ‘A Perfect Storm’ Of Buying Opportunities For Educated And Market Ready Investors!

These are the following reasons why NOW is the Perfect Storm!

1. Chinese buyers return to Australia's housing market and snap up properties, sparking fears prices could rise even further! Foreign buyers are returning to the Australian property market; the fear is, they could drive up the cost of homes for Aussies already struggling to buy one. 

China was the largest source of investment for residential real estate investment proposals by number and value ($0.6 billion), as it was in 2021-22 and 2020-21. The next two largest sources of residential investment were Hong Kong ($0.1 billion) and Vietnam ($0.1 billion). 

The investment figures that were recently released by the Australian Government’s Treasury, in its Quarterly Report on Foreign Investment, cover the last quarter of 2022.

Total foreign investment in Australia fell sharply but Chinese buyers remained the most significant, with $600 million of approved investment, even though that was down $1 billion.

With Hong Kong investment included in the Chinese total, Chinese investment this quarter accounted for $700 million of Australian property. After China, the next largest investors were Vietnam, Singapore, and the United Kingdom, each of which invested $100 million in residential real estate.

In this quarter, the largest target sector for proposed investment for the quarter by value was commercial real estate, with a total value of $19.3 billion.

The United States was the largest source country for commercial investment proposals by number and value ($16.7 billion), as it was in 2021-22 and 2020-21. 

The next four largest source countries by value were China ($6.7 billion), Singapore ($5.2 billion), South Korea ($4.2 billion), and Canada ($3.8 billion).

While the overall numbers are down, the return of Chinese students to Australia, an end to pandemic travel bans, and warming relations between the two countries, are driving a rise in property inquiries from China.

Juwai IQI Co-Founder and Group Managing Director Daniel Ho said that at the current rate, China would invest an estimated $3.2 billion in Australian residential real estate this year, which would be up from $2.4 billion in 2021-22.

With the inclusion of Hong Kong, China would invest $3.8 billion, which would be up from $3 billion last year. 

“In 2022 and so far this year, Australia is the most popular country for Chinese homebuyers, for the first time ever, according to Juwai IQI Chinese buyer enquiries,” Mr Ho said.

“In January, Chinese buyer inquiries for Australian real estate surged by 24 percent compared to December, due to the announcement that borders would be reopening.” The latest data from national removalist booking platform Muval has revealed Australians are continuing their exodus from Sydney, looking strongly in favor of Melbourne.

2. Inbound inquiries show the laneway capital remains streets ahead of the rest according to the platform; Melbourne was the most popular city to move to in 2022, with the February figures showing the city accounted for the most eyeballs. 28% of all major metro inbound moving inquiries were for Melbourne. This is an increase from last January when Melbourne accounted for 24%.

3. Melbourne homeowners are holding back from listing properties in the declining market, resulting in almost a 30 percent drop in the number of homes for sale in some regions year on year.

House hunters have fewer properties to choose from as falling property prices prompt vendors to rethink plans and some to delay selling until the market improves.

Buyers in Melbourne’s north-east have seen the biggest drop in homes on offer, as new listings in January – properties marketed for 30 days or less – were down 28.2 percent year on year. This fall was closely followed by the inner south, where new listings dropped by 28.1 percent.

The inner region was down 21.9 percent, the outer east 19.7 percent, and the west 15.4 percent.

New listings were down more than 10 percent across Melbourne, but the number of homes hitting the market on the Mornington Peninsula rose 3.3 percent.

The total number of homes for sale was also down in most Melbourne regions except in the northwest and west of the city, where numbers were up 13.9 percent and 8.2 percent respectively. In the Mornington Peninsula, they were up 27.8 percent.

4. Melbourne rents have rocketed to record highs, jumping as much as 20 percent in a year and prompting fears of homelessness and housing stress for low-income households. In fact, there has never been a tougher time to be a renter in Melbourne, where vacancy rates are just 1.4 percent and rents have hit record highs.

The median weekly cost of renting an apartment in Melbourne last week hit $450 – a 20 percent increase on 12 months earlier – while in inner Melbourne rents have reached a weekly median of $490 a week, according to the Domain Rent Report for the December quarter.

The most recent Australian Bureau of Statistics figures, taken in August, showed the median weekly income in Melbourne was $1300 (across Victoria the median was $1250). Rental stress is defined as paying more than 30 percent of one’s income in rent, meaning for a single renter on a median wage in Melbourne, anything more than $390 a week would put them in rental stress.

For houses, the median rent reached a record high of $480 and grew 7.9 per cent in the 12 months to December.

The increase comes amid growth in demand as tenants make pandemic living habits permanent and eschew share houses for their own space, at the same time as international borders reopen.

While rental increases are bad news for tenants, its great news for landlords, especially for those who purchased their investment properties in the inner east and Bayside where rental yields have increased over 16 and 17 per cent respectively, far beyond any increases in interest rates over the same time period.

5. Record Low Vacancy Rates;

6. Financial markets think rate hikes are done... now pricing is in a rate cut through the second half of the year.

In fact, I believe, that many property investors who are currently staying out of the property market will look back retrospectively and realise that November and December 2022 were in fact the lowest and most opportune times to enter the Melbourne property market from a ‘Market Timing Perspective’…

Don’t miss out, CLICK HERE to get up to date video education from Konrad Bobilak.

Dear Fellow Property Investor,

Did you know that Melbourne and Sydney have officially entered the beginning of the growth part of the next property cycle?

This CoreLogic graph perfectly captures the cyclical nature of the Australian property market – and suggests we may be entering another growth phase.

The share of Australian suburbs that recorded price growth over a rolling three-month period rose from 18.7% in December to 34.6% in March.

As the graph shows, the market started booming in late 2020, and, by early 2021, almost every suburb in Australia was experiencing quarterly growth.

The market then cooled sharply from early 2022, but this downturn appears to have bottomed out in October when 16.5% of suburbs posted quarterly growth.

Since then, the share of growth in suburbs has been trending upward.

So the first million-dollar question is…

Are you market-ready to take advantage of the prevailing circumstances?

And the next million-dollar question is; 

Do you have the skills and knowledge to correctly identify the best-performing suburbs in Melbourne in 2023 right now? 

Or will you simply wait by the sidelines and see other savvy property investors snap up the best opportunities?

Now I know what you are thinking…

But Melbourne is very expensive now, as the average 3-bedroom townhouse in the bayside area or the eastern suburbs costs between $1.5 to $2 million dollars.

And yes, that’s very true. 

So If you have a budget of only $700K, where do you buy?

Well, the answer is in suburbs that are currently going through the process of gentrification!

The bad and ugly ducklings of today will become the trendy-hipster suburbs of tomorrow.

Case and point; Brunswick 20 years ago, Carlton 20 years ago, St Kilda 20 years ago, Northcote 20 years ago, and Yarraville 20 years ago, just to name a few.

Take Northcote for example, known as the poster boy of the Gentrification phenomena in Melbourne, from 2011 to 2023 Northcote boomed!

In Northcote West, the median income is now $1216 per individual, an increase of 62 percent from 2011. In Northcote East, the median leaped 55 percent over the decade to $1130.

Footscray and Yarraville were also suburbs that were showing similar signs of gentrifying. Wealth has also increased rapidly in Thornbury, the median weekly income has risen from $641 in 2011 to $1041 by 2021, an increase of 62 percent.

So where are the Gentrification suburbs of tomorrow?

Join me for an exclusive 1.15-hour video where you will discover advanced property investing strategies to use in the current market to identify, with laser-like precision the best-performing Gentrification suburbs of tomorrow!

You will also learn specific real estate finance and due diligence methodologies that will give you the confidence and skills to start building your property portfolio as soon as you finish watching the video;

Many of you will be thinking right now…’ have I missed the boat? Especially on Suburbs experiencing Gentrification?

Well not really….

One of the most fundamental principles of property investing in Australia is to appreciate that the market moves in distinct cycles which are characterized by periods of strong capital growth and demand for properties, through to periods of a flat-lining market, following periods of distinctive falling median prices, lower demand for properties, and a decline in property prices. 

The general rule of thumb is that these property cycles last 7 to 10 years, and can be segmented into 4 main parts, the ‘Peak of the Market’ being the shortest of the four; 

  1. Peak of the Property Market – High capital growth, auction clearance rates of 85% plus.
  2. Decline of the Property Market – Declining capital growth, auction clearance rates dropping from 80% to 60% and 50%.
  3. Bottom of the Property Market – Extended periods of low capital growth, auction clearance rates of 45% to 50%. 
  4. Growth of the Property Market – Increasing capital growth, increase demand for property, increased auction clearance rates, 55% to eventually 75%.

Would you like to know exactly where Melbourne or Sydney is located right now on the property clock?

I will be revealing the location of our major property markets on the property clock during this video. 

Plus…

I will also reveal my TOP 10 Gentrification Suburbs of Tomorrow, those that are destined to experience double-digit capital growth over the next decade!

In fact, one of these suburbs is booming right now, and no one is noticing or even talking about it in the mainstream media.

The main thing to remember is that money is made by both the timing of the market, and of time in the market. 

Finally, for those of you with deeper pockets, I will show you the top ten suburbs in Melbourne that have consistently hit double digits in Capital growth over the last 10 years, and more importantly, the top 10 areas that will have the highest potential to outperform the rest of the property market in 2023 and over the next 5 years!

I will also show you the exact type of properties, i.e. house and land packages, townhouses, or apartments to target in these areas, and why….this section will surprise many of you. 

So what are you waiting for?

Check out this video NOW!

Don’t miss out, CLICK HERE to get up to date video education from Konrad Bobilak.

Dear Fellow Property Investor,

Did you know that one-bedroom flats in the big cities have missed out on Australia's property boom despite interest rates being at record lows?

National home prices last year surged by 22.1 per cent - the fastest annual growth for a calendar year since 1989.

House values in some capital cities went up by a third in just one year as two and three-bedroom units had double-digit annual price growth.

But one-bedroom apartments hardly increased in value at all, especially in cities with oversupply issues, Domain sales data showed. 

In Australia's biggest cities, values were either flat over the year or increased by single digits even though the Reserve Bank kept the cash rate at a record-low of 0.1 per cent.

Young couples with a child usually prefer something larger with a bedroom for the baby, which means the potential market for one-bedroom units is smaller.

Investors often buy smaller apartments to rent out but Sydney's unit market is now going backwards for the first time since late 2020 despite a reopening of Australia's border to international students and skilled migrants. 

Economists are expecting the Reserve Bank to raise interest rates later this year, which would cause a slowdown in house price increases and a fall in 2023. 

In Melbourne, the median price for a one-bedroom unit remained flat over the year, staying at $395,000 as the city was kept in lockdown for many months.

By comparison, mid-point house prices in the same city rose by 18.6 per cent to $1,101,612. 

Apartments in general still had a lacklustre year with two-bedroom units in Melbourne going up by 4.5 per cent to $606,000.

Larger, three-bedroom units did better though with values rising by 12.1 per cent over the year to $846,250.

Inner-city areas of the Victorian capital had some of Australia's highest rental vacancy rates during the earlier stages of the pandemic, after the border was closed to foreigners.

Sydney also saw smaller units vastly underperform the increase in house prices and larger apartments.

One-bedroom units went up by just 6.6 per cent annually, to $680,000. 

This was well below the 33.1 per cent surge in the median house price to $1,601,467.

Larger apartments, however, had double-digit growth with two-bedroom unit prices rising by 10.9 per cent last year to $825,000. 

The median price of a three-bedroom apartment in Sydney went up by 14.1 per cent to $1.325million.

But new CoreLogic data released this week showed Sydney's house and unit prices together falling by 0.1 per cent in February - marking the first decline since September 2020, before the Reserve Bank cut the cash rate to a record-low of 0.1 per cent.

Median apartment values dropped by 0.3 per cent to $831,793, which was the sharpest decline since November 2020.

Australia's median home price last year rose by more than 22 per cent, marking the fastest calendar year increase since 1989. 

The annual increase has slowed to a still-strong 20.6 per cent, with $728,034 now the middle point for a property.

One-bedroom units in Brisbane went up by just 4.1 per cent over the year to $333,150, the Domain data showed.

This occurred as the median house price surged by 25.7 per cent to $792,065.

Two-bedroom apartments had double-digit price growth, going up by 10.2 per cent to $452,000.

But the median price for a three-bedroom unit fell by 2.1 per cent to $460,000.

Canberra, however, was a rare exception with the median price of a one-bedroom unit surging by 15.4 per cent to a still-affordable $410,000.

Two-bedroom units did even better with an annual price increase of 28.6 per cent to $575,000 as three-bedroom apartment prices rose 25.9 per cent to $752,000.

Last year, Canberra's mid-point house price rose by 36.6 per cent to $1,178,364.

But in the other mainland capital cities, the value of one-bedroom apartments went up in the single digits last year.

Perth's median price for a one-bedroom flat rose by just 6.3 per cent to $276,500. 

But this was at least better than the 1.4 increase for two-bedroom units, taking the mid-point to $350,000.

In Adelaide, the median price of one-bedroom apartments increased by eight per cent to $289,000.

By comparison, two-bedroom unit prices rose by four per cent over the year to $348,500.

Nonetheless, three-bedroom units had strong growth, with prices climbing by 15.9 per cent to $524,000.

Kind regards,

KONRAD BOBILAK

Investors Prime

Interested in learning more about property investing in Australia? Please visit our main website InvestorsPrime.com.au for loads of free resources, articles, videos and more to help you on your investing journey.

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