After 20 years of providing lending advice to borrowers, we have observed the trends in property buying and investing
- House & land packages Melbourne- buyers are usually first home buyers , household with family and migrant community. These buyers still feel that a 4 or 5 bedroom house with a bit of backyard is what they need. More often than not affordability is the issue and hence the compromised to buy in less desirable and far away locations. Investors buyers tend to target the smaller blocks to achieve a better return and do not expect growth in the short term. Land parcels are located from 22kms-60kms from Melbourne CBD. Land sizes in all the new housing estates varies from 250sqm to 550sqm with the occasional ¼ acre blocks usually in much further away estates like Sunbury Fields. Some estates are master planned community (MPC) which tend to attract more owner- occupiers. MPC would have schools, shopping, retail and outdoor amenities which contributes to the liveability of the estate.
Generally, land parcels are located in
- House and land packages in Melbourne south eastern suburb - some of the better performing estates are Tulliallan Cranebourne North; Alira Berwick, Hartleigh Clyde, Somerfiled Keysborough, Bentley Park Keysborough, Grandvue Officer
- House and land packages in Melbourne West including Werribee: The Address Point Cook, Saltwater coast Point Cook, Upper Point Cook ; The Heartlands Tarneit, William Landing, Alwood Werribee, Harpley Werribee, Atherstone Melton South, Jubilee Wydham Vale, Willandra Melton West, Redlands Werribee, Orchard Tarneit
- House and land package in Melbourne North: Kallo Donnybrook, Auroroa Epping, Merrifileds Mickleham; Rathdown Wollert.
- Apartments in Melbourne for Sale off the Plan: Small boutique apartment blocks of 50 or less in location no more than 15kms from Melbourne CBD. Buyers for these tend to be those who are already living in the area either renting or living with parents who are used to the proximity of these areas to amenities and transport and lifestyle that they are used to. This cohort of people would find it really hard to go further out. And if they do buy a house and land it would be for investment. A well designed and located apartment project will still have great demand as the reality is less and less people can afford to buy a house in this location. The trend is really strong towards apartment living especially for the younger cohort and downsizers.
- Townhouses for sale off the plan. These are predominantly in new estates further away in the North, East or West of Melbourne. Townhouses can be sold either on a single contract or a split contract. Buyers of split contract need to be aware that there are a lot of restrictions in lending as lenders do not prefer split contracts. These are priced at the lower end to attract investors and first home buyers. Supply is really small in comparison to a house and land contracts which are a single contract and suitable for investors and first-home buyers. Prices points are normally below the 550,000. Supply is really small in comparison to a house and land contracts.
- Townhouses for sale in established suburbs. For buyers who would like a brand new dwelling in established and familiar surroundings. This cohort of buyers is either Asian or those who are not a fan of old houses, double income no kids who are chasing lifestyle but still want a bit of space. The price range could be 1.25 mil to 2.5 mil depending on size, development and location. Many established suburbs such as Glen Iris, Malvern, Balwyn, Blackburn, Clayton, Carnegie etc where land blocks are larger tend to have townhouses project. But due to the high prices of these areas, developers are increasing buying blocks as far as Knoxfield, Ringwood, Wantirna, Boronia and Springvale.
- Mixed used project- are popular amongst investors and first -home buyers. These types of development tend to be located in an established suburb but located in a commercial zoning area where there is no obvious convenience like shopping or entertainment. A great example would be M-City which is located 500metres to Monash University. This development will have 4 residential blocks, hotel, retail hub and equipped with amenities to deliver a 24/7 lifestyle. Another one would be Oros in Oakleigh which will house a fully serviced hotel, residential apartments and townhouse all equipped with amenities to enabled a very desirable lifestyle.
- Luxury high rise development:
Up until the 30th of June 2016, buyer for high-density high rise developments in Melbourne CBD has been non- resident purchasers. Previously a 100% of these could be sold to non- residents but since then the rules have changed and we will see a slowdown in foreign buyers’ acquisition in this space if the punitive legislation is effective. Downsizers and empty nesters are the other cohort that buys into these projects. The level of amenities, security and lifestyle are the main reasons for a purchase decision. Investors who are chasing yields will also buy here. Developers of this type of project in the CBD will either have to cater for the local cohort who will buy and rely less on non- resident purchase or move to the city fringe to develop a better product to meet with local needs. Over time this type of living maybe more acceptable especially for new migrants who came from countries where apartment living is the norm.
Victoria is still the fastest growing state and according to Vic Government forecast the boom has just started, Victoria’s population is due to double between now and 2051, we still have plenty of people to house which will make property investment a viable proposition going forward. There will be more migrants, empty nesters and young couples.
The most significant change that will impact off the plan purchase is the impost on investors no longer being able to claim the off the plan stamp duty benefits. First home buyers on the other hand will receive substantial stamp duty benefit for purchase up to $750.000 which will no doubt impact prices in fringe suburbs.
In Melbourne, due to traffic gridlock more and more people are opting to live in apartments and choose lifestyle and reclaiming lost time from commuting. The future of apartment living will be more a reality than we care to admit.