Melbourne struggles to outperform Sydney
The value of homes in Melbourne is still down, but it remains in a better place than Sydney.
According to CoreLogic's Hedonic Home Value Index for January 2019, Melbourne experienced a 7% drop in real estate prices in 2018, just behind Sydney (down 8.9% ). The decline particularly affected the housing market, with a drop in values ​​of this segment of 11.2%. In contrast, the cheaper sectors are gaining ground and recording moderate growth.
"The increased performance of low-value properties probably reflects both affordability issues and lending policies aimed at reducing exposure to borrowers with a high debt-to-income ratio. These factors, along with the incentives for first-time homebuyers in NSW and Victoria, are likely driving market activity toward the lowest housing values, "said Tim Lawless, Head of Research at CoreLogic.
While rental yields have risen across the country during this period, yields in Melbourne are still well below average and it will take some time before seeing any noticeable increases in this area.
"Considering that leasing conditions have remained relatively flexible, the recovery in gross rental yields is likely to be a long and gradual process," says Lawless.
Melbourne is still an investor's dream
The correction period for Melbourne will not end while the accessibility of housing remains a problem for buyers. Tim Lawless's outlook for 2019 indicates that house prices remain about eight times higher than typical household incomes. The rate of decline has increased along with the supply of housing and population growth is also starting to slow down.
However, despite the trend of negative growth, Melbourne continues to be one of the main prospects for investors. According to the Emerging Trends in Real Estate Asia Pacific 2019 report, jointly published by the Urban Land Institute and PricewaterhouseCoopers, Melbourne has been chosen among its peers in Sydney and Singapore as the most promising city in terms of investment and Asia-Pacific.
The report notes that the limited stock of offices in Melbourne is an important factor, as it has caused a decline in vacancies and could in turn inspire an increase in rents. Commercial space yields are also high – an important advantage as Melbourne becomes more affordable.
SPOTLIGHT ON A SUBURB
MERNDA: The home market is declining
The correction begins to arrive in the Mernda suburb of Whittlesea LGA, where housing prices fell for the first time since 2013.
From January to December 2018, values ​​fell 3.2%, generating a median price of $ 565,915. However, the unit market maintained its upward trajectory, recording growth of 6.9% over the same period. Sellers were also generally able to unload units without having to discount the asking price.
Weekly rental rates for both types of buildings increased significantly – by 6.8% and 5.5% respectively for homes and units.
The suburb has experienced significant development in recent years and public transportation has improved with the creation of a local railway station.
Conveniences: Mernda Station Helps Travel To Melbourne
Discount: The average supplier discount on unit sales is 0%, highlighting strong demand
Do you have more than $ 200,000 in your super fund? You Can Use Your Super To Buy A Property – Find Out How
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