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Melbourne Property Market Update January 2024 - By Konrad Bobilak

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

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,

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,

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!

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

Dear Fellow Property Investor,

Australian property prices are continuing to rise, with capital cities now hurtling towards record-high prices for houses and units.

Domain’s September House Price Report found the housing market was near full recovery following the downturn in 2022.

Across the capitals, house prices are just $2,000 short and units $5,000 shy of hitting new record highs.

In Sydney, the median price of a house is now $1,578,099, in Melbourne it is $1,032,266 and in Brisbane it is $848,752.

For units, the median price in Sydney is now $781,024, in Melbourne it is $573,067 and in Brisbane it is $495,143.

“September’s quarter confirms all Australian capital cities are in recovery or at a price peak,” Domain chief of research and economics Dr Nicola Powell said.

“Sydney continues to lead the recovery, with Brisbane close by. By the end of the calendar year, house prices in Sydney and Brisbane are anticipated to recover fully from the 2022 downturn, reaching new records.”

Adelaide, Perth and Sydney led the charge for house price gains over the September quarter, while Adelaide, Perth and Melbourne saw the biggest unit price gains.

“Adelaide and Perth’s house prices are at an all-time high. For units, it’s Adelaide and Brisbane. These record-high numbers are driven by a series of factors: interstate migration, record levels of overseas migration, a tight rental market, and a chronic undersupply,” Powell said.

Despite the rise, the pace of growth, quarter on quarter, has eased by roughly a third.

Stretched affordability was slightly dampening the pace of growth, Powell said, with quarterly growth easing by roughly one-third.

“If mortgage rates weren’t as high as they currently are (5.98 per cent for a new owner-occupied home loan), price growth would be faster with the current housing undersupply,” Powell said.

Interested in learning more?

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,

A major bank is expecting house prices to run hot for the rest of the year - but renters already struggling with the cost of living will battle to keep a roof over their heads.

NAB has increased its near-term forecast for the capital cities to an eight percent rise in house prices, up from the previous forecast of 4.7 percent.

While the bank predicts price gains will ease in 2024 back to five percent, this still represents a whopping 13 percent growth in what property buyers need to fork over in just two years. 

Adelaide homes are expected to gain 8.6 percent in value for the rest of 2023 and then slow to a 6.2 percent gain next year.

PropTrack senior economist Eleanor Creagh told realestate.com.au that a lack of choice was driving up prices in the smaller capitals.

However, Ms Creagh said another smaller capital, Hobart, was not performing so strongly with prices increasing by 6.6 percent from the March 2022 peak.

'However, this comes after several years of outperformance as well as strong growth during the pandemic. Home prices in Hobart are still up 38.4 per cent since March 2020, ' Ms Creagh said.

NAB predicts Hobart prices will actually dip 3.3 per cent this year and be flat in 2024 - meaning there's at least some hope for first-home buyers looking to get their foot on the property ladder.

Sydney values are set to increase by 11.6 per cent in 2023 before slowing to five per cent in 2024.

Melbourne is only the capital predicted to see the price increases accelerate next year from 4.7 per cent to 5.5 per cent.

The housing shortage continues to spell bad news for renters with modelling released in August by Suburb trends forecasting many tenants could face increases of over $100 per week by next year.

In Dee Why, on Sydney’s northern beaches, rents are forecast to increase by a whopping more than $300 a week and $200-plus increases are also forecast for other popular areas in the city.

Queensland renters living in Surfers Paradise, Broadbeach and Isle of Capri can expect to paying an extra $170 a week by 2024.

Houses and units in the Victorian capital's suburbs of Port Melbourne, South Melbourne and Southbank are facing the steepest increases in that state, with average rents forecast to go up by $165!

In hundreds of other Aussie suburbs, rents are forecast to rise by less than $50 per week.

Interested in learning more?

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!

Book Real Estate Investing Fast-Track Weekend
Don’t miss out, CLICK HERE to get up to date video education from Konrad Bobilak.

Off-the-plan apartment prices in some Melbourne suburbs could go up by as much as 25 per cent over the next year as developers adjust pricing amid rising costs and increasing demand, property advisory firm Charter Keck Cramer says.

“Prices will recalibrate upwards, and I think in about 12 months, it’s going to be across the entire Melbourne apartment market,” said Richard Temlett, Charter Keck Cramer’s national executive director.

“In certain areas, depending on the developer and project, buyers can expect to pay between 15 per cent and 25 per cent, even more in some cases. That’s certainly where the market is going and evolving.”

Developers will have to increase prices to offset the rising land values and construction costs so they can continue delivering apartment projects. But many remained reluctant to raise prices amid low consumer sentiment and higher interest rates, Mr Temlett said.

“Many developers are still very worried about increasing prices. And I’m encouraging them to be a bit more brave because there are sound fundamental reasons to support price increases,” he said.

“The development industry needs to realise that over the next six to 12 months, they can increase prices in a lot of areas and will still be met with a deeper pool of buyers. In fact, it’s already happening in some projects.”

Charter Keck Cramer’s analysis of a sample of off-the-plan apartment projects across various locations in Melbourne shows that several of those released this year have increased their prices by 15 per cent to 25 per cent compared to pre-COVID prices of apartments in earlier stages of the same development or in comparable projects in the same locations.

The study spanned 10 suburbs in the middle ring areas, and consisted of three apartment projects on average. 

“The price gains were submarket specific, but those that posted large increases were not high-end landmark projects, they were quality owner-occupier stock in the suburbs,” Mr Temlett said.

“Interestingly, the market is accepting those price increases, albeit at a slow rate. Buyers understand what’s happening with costs and what’s happening in the market, and they are prepared to pay a higher rate.

“So these are demonstrable examples of apartment prices reverting upwards. I think there’s going to be an increase in demand for such dwellings because we’re not building enough houses or apartments.” 

The advisory firm predicts that Melbourne’s apartment supply is set to slump by 7900 units, or 65.3 per cent, by 2025.

Mr Temlett said the rapid interest rate increases, substantial rise in construction costs and volatile consumer sentiment have made many apartment projects unfeasible and led to very slow sales rates.

Meanwhile, the 4 percentage point interest rate rise since May last year has slashed buying power by more than 40 per cent. 

However, these factors also opened up a very large but slightly different buyer and renter pool over the next 12 months, he said.

“With rapid rate rises, there is anticipated to be a ‘shuffle’ downwards or trade-off, where many buyers are forced to trade into medium- and higher-density dwellings as dictated by their revised finances,” Mr Temlett said. 

“Many people are still willing to buy, but they can’t afford to buy a standalone house because of affordability, so more will either be forced to live in apartments or will embrace apartment living.”

The price premium of houses over apartments has widened to 60 per cent despite a 9 per cent house price drop from the peak. Since March 2022, house prices are still 15 per cent higher than pre-COVID and are poised to continue rising.

“With rapidly rising rents, some renters may decide to buy and pay off a mortgage given that rental repayments may be similar to mortgage repayments in some markets and across various product types,” Mr Temlett said.

“These potential buyers are likely to seek the most affordable product type, which will be apartments.” 

Mr Temlett said while conditions in the build-to-sell apartment market were arguably the toughest they have ever been, the sector will continue to improve.

“We believe that the RBA is close to the top of the rate-tightening cycle. When rates stabilise, we expect market demand will start to be expressed and sales rates will accelerate,” he said.

“When rates start to be cut, there is anticipated to be an extremely elastic response across the entire housing market, with the apartment market well poised to benefit.”

Did you know that according to the latest CoreLogic’s national Home Value Index (HVI) rose 0.7% in July marking a fifth consecutive month of housing value recovery? 

The recent five consecutive increases look like this;

July 2023 + 0.7% 

June 2023 + 1.1%

May 2023 + 1.2%

April 2023 + 0.5%

March 2023 + 0.6%

Graph: Rolling 3 month change in dwelling values state capitals

Plus inflation is tracking at 6% per annum, putting even more pressure on the currently escalating property prices! 

Let me ask you something…

Do you have a game plan for 2023? 

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 at the next Real Estate Investing Fast Track Weekend!

Click HERE to reserve your seat now!

Dear Fellow Property Investors,

Inner-city Melbourne renters have been slugged with the biggest rent increases in the city, with asking rents climbing as much as 45 percent in some suburbs.

Experts say rents are rising at an alarming rate, while inner-city tenants say the prospect of paying more money to their landlords than they can afford keeps them up at night.

Units had the biggest spike by far – rents soared by 45 percent in Melbourne’s CBD over the past 12 months to a median $580 a week, 33.8 percent in West Melbourne, and 31.4 percent in Carlton, Domain data shows.

Asking rents for houses grew strongly, too. They were up most in Hughesdale at 23.5 percent to a median $618, followed by Werribee South at 23.1 percent and St Kilda West at 21.9 percent.

Rents increased by at least 10 percent in more than half of unit markets across Melbourne and in more than a third of house markets.

Graph - Melbourne suburbs where rents rose the most

Domain head of research and insights Dr Nicola Powell said there was a clear trend towards rents increasing in inner Melbourne.

“When you drill down to that suburb level, all those areas with the strongest rental growth are in inner urban areas and inner-city locations,” she said. “What’s really interesting is that the trend is very strong in Melbourne.

“The areas that have seen the greatest increase in rents are those inner-city areas that are dominated by units.”

Powell said rents were rising faster in the inner city because of a reversal of the pandemic trend of tenants fleeing the CBD and the swift return of international students.

Despite some small relief in the vacancy rate – which rose from 0.8 per cent to 1 per cent – Powell said renters would still find navigating the market difficult.

“What we’ve got now though is vacancy rates have increased marginally,” she said. “But despite the vacancy rate nudging a bit higher, it showcases it’s still very much a landlord’s market, and it’s still challenging to tenants.

Let me ask you something…

Do you have a game plan for 2023?

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 at the next Real Estate Investing Fast Track Weekend!

Click HERE to reserve your seat now!

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Book Real Estate Investing Fast-Track Weekend
Don’t miss out, CLICK HERE to get up to date video education from Konrad Bobilak.

Dear Fellow Property Investor,

One of the most important aspects of building and structuring a large residential property portfolio is to start with the end in mind. 

That is, you must have an exact strategy or Blue-Print that is concise and all-encompassing before you start investing in property. 

Many investors get into a lot of trouble because they simply never clearly articulated and mapped out a concise strategy to begin with. Or they end up buying the wrong type of property, such as a serviced apartment in Queensland, studio apartment with living areas less than 50 square meters, or an apartment in a high-density development, and most likely end up selling that property within 5 year, realising a small profit and in most cases breaking even or a loss.

The first thing that you must appreciate is that you will go through 3 distinctive stages while you are building your property portfolio:

  1. The Acquisition and building stage,
  2. The Consolidation and refining stage,
  3. And the Harvesting stage.

These stages will vary from investor to investor, and will differ depending on investors personal Risk Profile, and time horizon for investing, as well as the amount of time, money or equity available.

In this segment of the event, you will gain a clear understanding of the importance of developing a personalised investment plan, based on your unique set of circumstances, and available resources.

During this segment of the event, you will also gain an understanding of the importance of creating a Master-Plan blue-print, before you do anything else. 

That is, your ability to clearly identify your outcome and ultimate goal for building a large residential investment property portfolio.

Now here is one of the most important aspects covered in this YouTube Video;

“You’ve got to know your numbers!” - That’s probably one of the most common pieces of advice you’ll hear from wealthy (and RICH) property investors. - “You’ve got to know your numbers!” – 

And in this segment, you will learn how to calculate cash-flow analysis via Property Investor Analysis Software.

The Property Investment Analysis (PIA) Program is an essential decision making tool for all property investors. 

It will analyse capital growth, cash flow, and tax implications for any investment property and provide instant feedback on projected after-tax cost and rate of return. 

The software will compute cash flow projections for up to 40 years and has facilities for changing more than 100 variables including property price, rent, capital growth, inflation, deposit and loan type. 

The internal rate of return (IRR) and the cost-per-week are recalculated automatically whenever a change is made.

That’s all for this months video, stay tuned for my next video. CLICK HERE to subscribe to my Youtube channel so you don't miss out.

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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