The growth train rolls on in Melbourne and Sydney and it doesn’t look like it will subside in 2017. Melbourne is looking stronger and stronger, with clearance rates edging over 80% in recent weeks and vacancy rates at just 1.7% it shows that the fundamentals in Melbourne are strong. How can there possibly be an oversupply of apartments with just a 1.7% vacancy rate and with rents growing faster than in most other Australian cities.

This is why the outlook for Melbourne is looking positive again this year and it is likely to have at least one more year of near double digit growth.  The inner south eastern suburbs have certainly driven the recent growth but with the affordability issues facing the city, Nyko Property believes the growth this year will be in the middle ring south eastern suburbs and in the inner north and west. The only outlier being very specific parts of the regional centre of Geelong which is driven by affordability and a fantastic lifestyle with Victoria’s best beaches within a short drive.

While houses will continue to outperform apartments and town house – their yields are significantly lower. Sitting at just 2.8% in Melbourne for Houses compared to almost 4% for units (i.e apartments and town houses). For this reason we believe buyers will flock to boutique high quality apartments and town houses with large internal and external areas

The average Australian makes their property buying decision based on location first and property type/size second. As the KPMG Demographer Bernard Salt explains they are more willing than ever to trade ‘space’ for ‘place’.

Apartments and town houses in the middle ring south eastern suburbs such as Bentleigh, Clayton, Oakleigh, Glen Huntly & Carnegie (and surrounds) will all continue to perform.  For town houses, the options are more limited – that’s if you want to purchase something that will actually value up at settlement.

Town House developers in Melbourne are no dummies and they are smart to the fact that this property type is gaining in popularity.  As the popularity is disproportionate to how a town house compares – say to a larger apartment, many developers are chasing prices well above the true value of the asset.

The key to buying town houses in this market, which is something Nyko Property does with every property it offers, is to insist on an independent valuation prior to purchasing the property.

With the stamp duty changes taking effect in Victoria on July 1 making the stamp duty on a $500,000 off the plan apartment over $20,000 higher – now is the time to act.

As the old Chinese proverb says, ‘the best time to plant a tree was 20 years ago, the second best time is now’.


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