Melbourne’s property market has undergone a remarkable transformation over the past year, transitioning from a struggling market to a growing one and emerging as a national leader in growth momentum. Nearly half of Greater Melbourne’s suburbs are now considered rising markets, with an impressive 87% of them showing positive rankings in Terry Ryder’s Hotspotting analysis. This shift represents a significant turnaround from the situation at the beginning of 2023.
This resurgence in market activity extends across the entire Greater Melbourne area, with the exception of the Mornington Peninsula. Most locations are experiencing thriving market conditions. Furthermore, Melbourne’s inner-city apartment market, particularly in the City of Melbourne, has witnessed a surge in buyer demand.
In the outer-ring municipalities, high demand is evident, with positive sales activity trends observed in suburbs across the City of Casey, Melton, Wyndham, and Whittlesea.
As Melbourne enters 2024, the property market is poised with strong momentum, signaling expectations of solid price growth in many markets throughout the year—showing promising signs of improvement compared to the previous year’s results
In 2023, Regional Victoria’s property market witnessed steady improvement, albeit not as dramatic as Melbourne’s recent surge. Throughout the year, Regional Victoria saw a strengthening trend, especially in the second half, with the number of thriving locations nearly doubling. While two-thirds of areas experienced positive sales activity, some regions lagged in embracing the overall recovery momentum. Comparatively, Regional Victoria’s 66% positive trend rate falls short of Melbourne’s 87%.
Geelong remains a standout performer, with its suburbs like Armstrong Creek and Charlemont leading the recovery. Similarly, Bendigo boasts a positive market, particularly in affordable suburbs like Eaglehawk, offering median house prices significantly lower than Greater Melbourne.
Nearly every suburb in Ballarat produced double-digit growth in median house prices during 2021 and into 2022. The area’s long-term growth rates are among the best in the nation. Ballarat was recently identified by the ABS as the fastest growing inland city in Australia and, according to some forecasters, can expect more strong price growth.
In 2020 Ballarat was named as one of Australia’s most liveable regional cities and the best regional city in Australia for economic growth.
The Cardinia and Mitchell LGAs near Greater Melbourne exhibit promising momentum, driven by towns like Officer and Pakenham. Other areas like Macedon Ranges, Moorabool, and the Latrobe Valley demonstrate consistent markets with relative affordability, attracting both homebuyers and investors.
Additional regional centers such as Wodonga, Wangaratta, Benalla, and Echuca are also experiencing positive market trends.
I am not saying that all of these locations make great investments but overall, Victoria’s appeal lies in its offering of affordable options in thriving regional cities like Bendigo, Geelong, and Ballarat, connected to Melbourne via robust road and rail networks. Moreover, towns like Shepparton, Mildura, and Warrnambool further expand the state’s diverse property market landscape.
So, let’s sum all this up. Investing in Victoria’s property market should remain a viable prospect despite fluctuations and uncertainties. Here’s why:
Resilience Amidst Challenges: While the property market experiences fluctuations, Victoria’s resilience shines through. Despite occasional downturns, historical data shows a consistent upward trajectory over time, proving its robustness.
Positive Growth Outlook: Most forecasts for 2024 indicate modest yet positive growth in property prices. Factors such as increased demand, low vacancy rates, and government stimulus contribute to this optimistic outlook.
Interest Rate Dynamics: Although interest rates may fluctuate, the potential for rate cuts in late 2024 could stimulate housing investment and attract more buyers. Such developments could fuel demand and bolster property values.
Regional Opportunities: Beyond Melbourne, regional Victoria presents promising opportunities for investment. Despite cooling price growth, certain regional areas experience increased interest from investors, offering potential for long-term gains.
Long-Term Appreciation: Property investment in Victoria offers the potential for long-term appreciation. Historical data indicates that property values tend to increase over time, providing investors with a hedge against inflation and a source of wealth accumulation.
Diversification Benefits: Diversifying investment portfolios with real estate assets in Victoria can mitigate risks associated with other locations.
Cyclical Nature of Markets: Recognizing the cyclical nature of markets, experienced investors understand that downturns are often followed by periods of growth. Investing during a downturn can present opportunities for acquiring properties at favorable prices, with the potential for substantial returns when the market rebounds.
Now to address the elephant in the room, the tightened tenancy laws and detrimental rental reforms in Victoria encompass various changes aimed at altering the balance of rights and responsibilities between landlords and tenants.
These reforms include:
Expanded Tenant Rights: Reforms have expanded the rights of renters, granting them increased protections in areas such as lease terms, rent increases, and property conditions.
Increased Protections for Renters: Amendments to rental laws include over 130 reforms designed to enhance protections for tenants, covering aspects like minimum standards for rental properties, repairs, and privacy rights.
Impact on Landlords: Landlords have expressed concerns over the reforms, citing potential financial implications such as higher taxes, stricter regulations, and decreased flexibility in managing rental properties.
Potential Market Effects: While there are claims that these reforms may drive some landlords out of the market, leading to fewer rental properties available, the overall impact on the rental market remains a subject of debate.
These changes aim to address concerns regarding rental affordability, property standards, and tenant rights, but they also present challenges for landlords in managing their rental properties.
Generally what they will do is drive more and more investors out of the market, and as all of you know who watch my channel, mum and dad make up the bulk of housing providers across Australia – so it will simply lead to fewer available rentals and increased rents.
In conclusion, while the property market in Victoria may face short-term challenges and uncertainties, its long-term prospects remain promising. With a positive growth outlook, potential interest rate cuts, regional investment opportunities, and the inherent benefits of property ownership, investing in Victoria’s property market continues to be a viable option for savvy investors looking to build wealth over the long term.