Melbourne

The Smartline Report – December Edition

The month in review: Melbourne

By Herron Todd White
December 2015

Arguably the biggest event to shape the residential market in Melbourne was the tightening of borrowing for investors by APRA. While the full impact hasn’t been felt yet, it is likely to cause headaches for developers trying to sell off new investment apartments, which may limit supply of new apartment developments being built. This is an attempt to cool down what is currently a fairly heated market, as the Melbourne property market is expected to have the highest growth in property prices, overtaking Sydney as the highest rising property prices. With the RBA holding steady on any interest rate movements, the banks independently raised their interest rates. This was the first real attempt at curbing the rising cost of entering the property market, as new home buyers are being forced further and further away from the Melbourne CBD to find affordable houses.

Predictions
The predictions for Melbourne in 2015 were fairly accurate, with increasing foreign investment in the greater metropolitan area and continued low interest rates. The government has begun intervening in the market in an attempt to ease the pressure caused by the soft local economy. We were off target in regard to modest growth in house prices in Melbourne, with housing prices growing at a much more significant rate, although there have been signs that this is now being reigned in, with median house price growth in Melbourne dropping from 6% for the June quarter to 2.8% in the September quarter.

Trophy Sales:
The below trophy sales were reported within Melbourne

6 Wills Street, Balwyn
This 981 square metre, circa 1930s red clinker brick residence was originally sold on 22 September 2014 for $2,230,000 and was sold again on 16 May 2015 at auction for $3,160,000. The growth of 41.7% in just under eight months is made even more impressive by the fact that the property isn’t situated within the highly sought after Balwyn High School zone.

46 Canberra Road, Toorak
This 613 square metre, circa 1970s brick dwelling was recently renovated by architect Ilario Cortese and sold on 10 February 2015 for $6,500,000. The property was previously sold on 3 March 2012 for $3,905,000 showing a substantial growth of 66.5% in just under three years.

Australia 108, Penthouse, 70 Southbank Boulevard, Southbank
The purported $25 million off the plan purchase of this 750 square metre penthouse, located in what will be the tallest building in the southern hemisphere, now has the title of Australia’s most expensive apartment ever sold. The apartment will boast a private grand foyer and its own glass elevator in addition to 360 degree views of the CBD, Port Philip Bay and mountain ranges. With construction due for completion in 2019, the sale of this apartment has cemented Melbourne’s place in the luxury apartment real estate market.

60-74 Buckingham Drive, Heidelberg
Banyule Homestead, built circa 1846, is one of the oldest remaining dwellings in Melbourne. The gothic style mansion sits on an impressive 9,105 square metre allotment and was sold on 16 May 2015 for $5,200,000. The heritage listed dwelling boasts 8-bedrooms, 4-bathrooms, ballroom, breakfast room, cellar, tennis court, pool and an impressive street frontage of 137 metres.

Strong Performers
In 2015 we saw strong performances in the middle western suburbs of Altona and Airport West.

Both of these suburbs saw continued growth and a considerable increase in demand for both houses and units.

The growth of Airport West is attributed to changing attitudes and sentiment towards the suburb, good access to public transport, its location within approximately 16 kilometres of the Melbourne CBD, the redevelopment of large lots into multi-unit sites and the $2 billion development of Essendon Fields. It is a combination of these factors that is driving market demand and median sale prices for the suburb are closing in on Keilor East, which has long overshadowed Airport West in demand and pricing. The median house price for Airport West recorded at September 2015 is $665,000.

The State Government rolled out plans for the redevelopment of Essendon Fields earlier this year and expects to create 25,000 new jobs. While the blueprint and timeline is over the next 30 years, it has already drawn great attention to Airport West within the business sector. The perception of Airport West has been shifting as people recognise its proximity to freeways, the airports and improving shopping and recreational facilities. With a number of residential developments now occurring, the population is densifying as home owners seek affordable housing in close proximity to the city. This is causing increased demand for vacant land and ageing dwellings on large lots as developers seize the opportunity to supply the market with infill developments.

Altona is an inner urban locale suburb, approximately 13 kilometres west of the CBD and has been a surprisingly strong performer this year with impressive capital growth and relatively high demand both in the sales and rental markets. The median house price for September 2015 was recorded at $710,125 (source: REIV.com.au). Similar to Airport West, a changing attitude towards the suburb due to accessibility to public transport, improving retail shops and facilities as well as proximity to beaches and the city have driven demand and desirability.

One of the largest former brown fill sites in Melbourne is located in Altona North and is forecast to supply around 1,900 new dwellings by the year 2036 due to the surplus of former industrial land creating additional housing opportunities in the suburb. This effect will impact the neighbouring suburb of Altona and thus the high demand for both sales and rentals will increase.

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Please note that information in this publication is subject to change without notice. Smartline assumes no responsibility for any errors, omissions or mistakes in this document. © Smartline Home Loans P/L 1999 – 2015. Australian Credit Licence Number 385325

 

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