Popularity of Investment Property in Melbourne in Australia

Why property in Melbourne has suddenly become the real estate investment must have in Australia

Many fundamental facts are stacking up in favour of real estate in Melbourne at the moment – economists, property analysts, investors and real estate market researchers are all telling us about the undeniable popularity of investment property in Melbourne in Australia as vacancy levels drop to dramatic lows, rental rates climb significantly and still property prices remain significantly cheaper than in Perth or Sydney for example.

This is a review of all the positive data received and an overview of the current state of real estate in Melbourne for anyone looking to buy property in Australia.

Starting with the property research company Australian Property Monitors, they recently released their predictions for the Australian residential real estate market for the rest of 2007 and their general consensus of opinion for the entire nation was that there will be a ‘modest recovery’ across the nation’s property markets as rental yields increase - and nowhere is this more true than in Melbourne where the property experts from Residex report that rental rates have increased by an average of 9% in just 12 months already.

Marcus Gilmore, the managing director of Australian based MLG Realty believes that not only are international investors being drawn to Melbourne but that local Australian property investor interest has been increasing in intensity in Melbourne because there is a commonly held perception among investors that the market is about to swing up again. 

Part of the reason for this perception and general anticipation of a strong upward swing in prices and demand in Melbourne is based on the understanding that prices in the city are just so much more affordable than in Perth or Sydney for example. 

According to Angus Murray who’s the director of PRDnationwide, investors are going to keep hitting on Melbourne and “the investment stream will keep up until the gap [between prices] gets filled.’’

Melbourne’s economy is buoyant, unemployment is down and investor interest is high, owner occupier numbers are rising as is demand for rental accommodation. 

Depending on which source you prefer to believe or recognise, vacancy rates in Melbourne are down as low as 0.6% or perhaps 1.2% compared to 7% in 2002 and 1.8% last year…this means that demand is outstripping supply which can only mean one thing – higher rental rates being charged and improving yield potential which is also likely to bring in even more property investor interest.

On top of this, as stated owner occupier levels are increasing and there has been a gradual rippling effect as the suburbs closest to the central business district have become less and less affordable and buyers have been moving further and further out pushing up prices in locations increasingly further afield.  At this moment in time, if you want to buy property in Australia and you’re thinking that Melbourne is certainly the place for you whether you’re looking for an amazing city to live in, a great location to earn a rental income or a great city with significant capital appreciation potential, just be aware of one thing…you’re going to need to move fast, of everything that’s coming to auction 80% is being sold out on the spot (that’s way higher than the national average) and what’s more, what comes on to the private market is being offered on and sold out in record quick time.

What all this adds up to of course is that the popularity of investment property in Melbourne in Australia is currently undeniable!