CoreLogic National housing Update October 2017
October Market Outlook
Offset or redraw? A look at the pros and cons
Capital city spring property update
5 smart ways to spring clean your finances
Adelaide October 2017
Brisbane October 2017
Cairns October 2017
Canberra October 2017
Darwin October 2017
Gold Coast October 2017
Melbourne October 2017
Newcastle October 2017
Perth October 2017
Regional NSW October 2017
Regional QLD October 2017
Regional SA October 2017
Regional VIC October 2017
South West WA October 2017
Sydney October 2017
Tasmania October 2017
Wollongong October 2017
CoreLogic NSW housing Update October 2017
CoreLogic QLD housing Update October 2017
CoreLogic SA housing Update October 2017
CoreLogic VIC housing Update October 2017
CoreLogic WA housing Update October 2017
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Melbourne October 2017
The month in review: Melbourne
By Herron Todd White
Traditional housing in Melbourne’s inner city has and is continuing to be dominated by apartment complexes and high rises, with 2017 seeing the development of a multitude of apartment complexes. The inner ring surrounding the CBD in 2017 has seen a great number of apartment complexes erected, with many home owners and investors in Melbourne gearing towards off the plan units within South Yarra, Southbank, Richmond and Prahran. Traditional, detached housings is still prevalent throughout the inner suburbs, but the landscape of Melbourne and the surrounding inner suburbs is shifting to strata titled units due to housing affordability and preference for low maintenance lifestyles.
Housing affordability in Melbourne has continued to push owners and investors looking for detached dwellings further out and away from the inner city in Melbourne as the housing market has become more competitive. Off the plan units and subdivisions of townhouses can be seen as strategies to combat housing affordability. The predominant age group within South Yarra and Richmond is 25 to 34 years, made up of young couples or lone households. Residents in these areas are predominantly renters (61% of occupants in South Yarra are renters), as the growth in price of these suburbs is moving families out. Families occupy only 22.3% of the housing (RPData 2017).
In the future, we expect housing in this market to continue to shrink, with off the plan units and new developments continuing to rise well above historic records, and households being shared by even more occupiers as renting continues to dominate these areas close to the city.
Melbourne South Eastern Suburbs Property Update
The conventional style brick veneer single or double storey detached dwelling appears to be the most popular house type in the south-east growth corridor and includes suburbs such as Officer, Clyde North and Cranbourne East. The typical residence for the area is a dwelling with 3- to 4-bedrooms, 2- or more bathrooms, open plan kitchen and covered outdoor area. The new design includes butler’s pantry, alfresco area, large walk-in-robes, dressing rooms and open space floor plans.
The south-east growth corridor has a wide variety of land parcel sizes depending on the timing of development. While sites of 500 to 700 square metres are typical in the original subdivisions, newly subdivided sites of 300 to 350 square metres create a large pool of affordable properties.
Generally the higher density developments are focused around activity centres such as Cranbourne Shopping Centre, Fountain Gate in Narre Warren and Casey Central in Narre Warren South. Often the compact design of townhouses, terraces and units reflects the developer’s attempt to attract a different market including small families, investors and younger couples.
In order to assist residential developments with their energy saving objectives, a large number of the new-build projects include renewable energy fit-outs (solar panels) and energy efficient technologies (LED lighting).
The Hebel is a high performance autoclave aerated concrete building system that has become a popular masonry material within the building market of south-east Melbourne. Builders recommend using Hebel as an external and internal building product because it’s efficient, stable and affordable and provides a high quality finish while maintaining the look and feel of solid masonry.
Melbourne Middle To Outer Eastern Suburbs Property Update
The great property evolution is in evidence in the Melbourne property market.
Within the outer eastern suburbs of Boronia, Ferntree Gully and Lysterfield, there is a conflicting interest between home owners and developers. Home owners are interested in larger living areas on smaller blocks of land while developers are seeking larger parcels of land with minimal improvements to then subdivide (subject to council approval). However, developers are also tending to seek properties close to amenities such as public transport and shops whereas home owners are more willing to be slightly further away from such amenities if it results in affordable property.
The majority of housing designs tend to be of a conventional exposed brick style with an increase in render and timber cladding for newly constructed or renovated dwellings.
Inter-generational living is more common within the middle eastern ring suburbs such as Mount Waverley and Glen Iris as these areas tend to be popular with overseas born families. There will often be three generations under one roof. Generally speaking, these homes have two master bedrooms with en suites and further bedrooms with built in robes and the generations share the kitchen, living and outdoor spaces.
It is believed that the future of housing in the eastern market will continue to shrink with regard to land size and the need to increase the quantum of dwellings to adjust to the increase in population and density. This will be driven by infrastructure upgrades such as the proposed Eastlink that are expected to assist in making transport into the outer eastern suburbs more convenient for home owners and renters.
Melbourne Western Suburbs Property Update
The inner western and north western suburbs of Melbourne such as Yarraville, Footscray, Moonee Ponds and Essendon are continuing to be redeveloped and are changing at a steady pace. Dated industrial buildings and older dwellings on larger blocks are being demolished to make way for townhouses and apartment complexes of varying sizes. As the population of Melbourne continues to grow, infill development is providing more dwellings for those wanting to live closer to the city centre. Investment purchasing continues to be dominant in Footscray, Flemington and Kensington with more than 50% of dwellings being occupied by tenants (RPData 2017). Intermixed with the modern style dwellings are renovated period dwellings, retaining many of the features of the original dwelling blended with modern fixtures and fittings. This is particularly evident in Essendon, Strathmore, Newport and Williamstown. While many are willing to embrace living in smaller spaces and foregoing a traditional back yard for a balcony or small courtyard, it does bring some concerns for infrastructure. With more residents moving on the roads, utilising the parking and public transport, these suburbs are feeling the pressure which will continue to be an issue with infill development continuing.
While not as rapid as the inner suburbs, we are seeing redevelopment occurring in western, middle ring suburbs including Laverton, Altona, Sunshine and St Albans. Older 1950s to 1980s style dwellings on sites of approximately 600 to 800 square metres are being redeveloped into multi unit developments. Geared more towards families, the redevelopments we are seeing are townhouses and units with typically small courtyards. These contemporary dwellings are usually brick veneer and feature rendering and light weight cladding externally with 2- to 3-bedrooms and 2-bathrooms. Many owneroccupiers are moving to these suburbs as they are generally more affordable than the inner suburbs. Investors are still active in these suburbs, however owner-occupiers dominate the market.
The outer western and north western suburbs are continuing to be developed with new estates opening, made up of approximately 300 to 450 square metre sites with a single conventional style dwelling consisting of 3- to 4-bedrooms with 2-bathrooms and 1- to 2-car garage. While there are a small number of townhouse developments these are not overly common as most purchasers look for a detached dwelling with a back yard. First home buyers and owner-occupiers dominate the market in the outer western and north western suburbs as these are the most affordable areas.
Melbourne Northern Suburbs Property Update
Australia in general and Victoria in particular have experienced rapid population growth during the past decade, leading to increased competition within the property market and thus increased housing costs. Those unable to afford larger dwellings and land sites in more developed (and therefore more expensive) eastern suburbs are turning towards Melbourne’s inner and middle ring northern suburbs.
Melbourne’s northern middle and outer rings comprise both established and developing suburbs such as Greenvale, Broadmeadows, Diggers Rest and Mickleham that offer value to those still following the Australian dream. A 3- to 4-bedroom, 3-bathroom conventional detached dwelling continues to be the most common dwelling type, although semi-detached 3- and 4-bedroom townhouses are becoming more popular due to their relative affordability. For instance, in Broadmeadows, detached dwellings comprise 67.7% of the residential market, with semi-detached dwellings and units and apartments comprising 15.1% and 13.9% respectively (REIV 2017).
Overall, Melbourne’s outer north market has not drastically changed over the past decade, but rather evolved to accommodate dwellings on smaller land sites and utilise more modern building techniques and materials, including installation of gas boosted hot water units or rain water tanks to comply with the 6 Star energy efficiency standard of the National Construction Code.
While Melbourne’s outer northern suburbs are still considered to be relatively low cost, blue collar suburbs with lower levels of household income compared to the eastern suburbs, they are also attracting young couples expanding their families and first home buyers due to the developing infrastructure (for instance construction of Merdna railway line) and a number of modern estates currently in development or nearing completion.
On the other hand, inner northern suburbs are seeing an increase in higher density developments to accommodate the growing population. In suburbs such as Brunswick and Coburg, semi-detached townhouses and medium rise apartment complexes are in high demand with both young couples opting to live in relative proximity to the CBD and downsizers choosing to exchange their larger detached dwellings in the outer rings for smaller accommodation closer to amenities and infrastructure.
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DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.