The Australian Housing Market has grown consistently and fast over the last several decades, thanks to the rapid expansion of the Asian area and Australia’s well-developed regulatory structure. Despite the concerns for the markets this year, Australia’s stable investment climate and growing home prices and rentals continue to make Melbourne an appealing location for international investors.
The Reserve Bank has maintained steady interest rates for the time being. The current interest rate of 1.5 % is based on stimulus measures enacted in response to fears of a rapid economic collapse following the conclusion of the mining boom. Due to Australia’s restricted growth of large-scale businesses, the low loan interest rate and flexible credit climate have driven an influx of cash into the real estate industry, resulting in a quick increase in the price of properties on the market.
The planning stage of a commercial project development project is the most crucial. A market analysis is one of the most important aspects of this procedure. We like to break this analysis down into three parts:
Physical Analysis
Physical Analysis in pre-development comprises environmental and terrain parameters that will affect a development’s viability. Soil quality, topography, Phase I (environmental site evaluation), climate, water, sewer, and transportation resources are all factors to consider. All these elements can have a significant influence on the building cost and size of a new property.
Analysis of the Economic Situation
As part of the Economic Analysis, we evaluate cash flow modelling and demand research. The permitting department of the city or county will have information on planned new developments that might compete for market share. Important demand factors include:
- Is the present vacancy rate a sign of overbuilding?
- Do demand predictions support the present development pipeline as well as the proposed development?
The backbone of the planning process is financial models. A cash flow model should be iterated when fresh data about building costs and market demand becomes available to ensure that the development stays feasible.
Analyze the Situation
Some developers have the misconception that “if I create it, they will come.” A multifamily construction in a suburban office park, on the other hand, is likely to do worse than a multifamily development near the trendiest clubs and restaurants.
Consider the following factors when evaluating a development’s location:
- The life cycle of the neighbourhood – Is the neighbourhood experiencing expansion, stability, decline, or renewal?
- Are inhabitants moving in or out, according to population trends?
- Market rentals are reduced in high-crime regions.
- Target Demographic — Is the location of your development appealing to your target audience?
Melbourne Property Market Analysis and Prospects
In recent years, two major policy concerns have emerged: housing affordability, which has resulted in measures such as stamp duty and land tax adjustments; and banking credit crunch, which has resulted in countermeasures such as bank credit contractions by the Australian Prudential Regulation Authority (APRA).
Because Australia lacks industries like mining and real estate that can power the economy, the central bank has been reticent to raise interest rates. Rather than attempting to control the growth of the property market, all of the actions might be read as ‘de-risking,’ in reaction to the concern of economic dangers produced by an overheated property market, and to promote the industry’s steady and sensible expansion.
The population of the city is rapidly increasing. According to McCrindle Research, Melbourne will replace Sydney as Australia’s largest metropolis by 2050. According to projections, the city’s present population of five million people will increase to eight million in the next 30 years.
According to National Australia Bank forecasts, Melbourne property values and housing prices will increase by 17.6% until the end of 2021, and then by another 3.5 % in 2022.
The following are the implications of these shifting demographic patterns and upbeat forecasts:
- In the real estate market, investors may generate significant profits.
- Homeowners may see an increase their real estate value.
Townhouses Market Analysis
Townhouses are moderate homes with more room for families than single-family homes. These homes are often multi-story, terraced, and semi-detached structures.
The popularity of townhouses stems from their more effective use of land, which is especially appealing in major cities. They are less expensive, which appeals to first-time home buyers and the younger generation.
As the population of the inner Melbourne property markets grows, they have the potential for higher price rise.
Low-Rise Apartments
According to Charter Keck Cramer’s Research, around to 14,000 apartments will be built in the Melbourne metropolitan region by 2020. The building of 10,400 units will begin in 2021. Only 5,400 lower-rise flats, on the other hand, have been built or permitted.
These figures indicate that purchasers’ appetites for high-rise Melbourne CBD buildings are waning.
Buyers have favoured lower-rise residences that are more suitable for families, resulting in an oversupply of tall flats. Because of this, low-rise apartments are more likely to appreciate in value.
Purchasing Property in Melbourne
When looking for a home in the Melbourne region, keep in mind the city’s typically high standards. Avoid poor properties since they will cost you more money in the long term.
One’s near the CBD appreciate more quickly, resulting in bigger capital gains and rental income than areas further away. It aids in determining the inherent worth of a product before purchasing it.
You stand to benefit if a residence is priced below its fundamental worth. It will, however, depreciate if the price is higher than the inherent value. Before you buy, you should investigate the area’s income levels, safety, and attraction.
With all of these factors in mind, it is clear that buying property under duress may be costly. Take careful consideration when eyeing certain properties and be well informed.
If you have any questions feel free to contact us at Sightstone for more information regarding any property you may be interested in.