As house and land prices continue to increase in Sydney, more and more property investors are turning to Melbourne, where median house prices are substantially more affordable.
CoreLogic home price index for February 2017 has shown another jump of 2.6% last month for Sydney house and land prices. This brings Sydney’s annual median house price increase to a staggering 18.4%.
Simply comparing the numbers between Sydney and Melbourne property investment data tells a story about the disproportionate prices in Sydney, with median house prices in Sydney now 46% higher at $1,123,000 versus $770,000 in Melbourne (source: Core Logic). Unfortunately, this rapidly growing median house price in Sydney is stopping many from entering the property market or putting enormous pressure on desired rental yields for investors. Ultimately the well above average growth in Sydney housing prices is also making Melbourne a more attractive proposition for many investors.
At iBuildNew we have identified three key factors that have been instrumental in building the demand for Melbourne property investment over recent years.
Understanding Property Investment in Melbourne
1. Affordability
From an affordability perspective, it is easier to purchase a property investment in the Melbourne housing market. Prices are lower and you can purchase house and land packages in Melbourne for significantly less than Sydney. This is particularly attractive for Investors and First Home Buyers. Astute Sydney investors are snapping-up house and land packages in Melbourne priced from $348,600 or a double storey house from $562,500.
Many investors are buying before July 1, 2017, to avoid the proposed Government Stamp Duty increase, which is saving investors tens of thousands of dollars. In 2016 Melbourne recorded a population growth rate of 2.4%, translating to 107,770 new people adding to the need for quality rental properties. These compelling numbers continue to put upward pressure on Melbourne house prices leading to strong capital growth environment for investors.
2. Melbourne Living
Whilst Sydney is well known for its harbour views, beach weather and idyllic lifestyle, people have taken note of Melbourne’s cosmopolitan culture and international status of being awarded the most liveable city in the world for 6 consecutive years. Melbourne rivals Sydney in terms of prestigious schools and education, beaches, sporting culture, safe communities and employment opportunities. While this cultural gap is shrinking, the demand for quality house and land packages in Melbourne’s growth corridors in the South East, West and North is increasing significantly.
3. Investor Regions are Expanding
The Australian Bureau of Statistics (ABS) housing finance data for January 2017 shows that the demand for property investment is continuing to surge, predominantly from interest rate cuts and the return of lending to domestic investors over the past year. As property investment demand grows, so too does the geographic regions in which investors are prepared to look to secure a bargain to maximise their returns. As shown in the CoreLogic data comparison above, purchasing turn-key properties and fixed house and land packages in Melbourne offers significant financial advantages and buyers often feel they are getting more ‘bang for their buck’ with Melbourne’s affordable prices compared to Sydney.
How to Find the Best Investment Property
When you are searching for a property investment opportunity outside of your home state, it’s comforting to have a trusted source of information or property experts that can help with your decision. iBuildNew represents a qualified panel of builders and developers and has access to property research, to ensure you buy the best property available within your budget.
iBuildNew house and land packages in Melbourne provide absolute peace of mind with 100% fixed price and designed to be tenant-ready meaning you secure a return on your investment sooner. The benefits of a complete house and land package are very attractive to many interstate buyers. If you’re looking for advice, call our Agency Principal Rob Puzzolo 0438 888 885 or email rob@ibuildnew.com.au.
Options to Secure Investment Loans
With banks looking at investor’s capacity to repay loans in the event of small interest rate rises, it makes good sense to buy an affordable property with capital growth potential. Purchasing in Melbourne allows Sydney Investors to maintain their standards of living or make extra repayments to increase equity. Banks also prefer turn-key complete homes as no extra money is needed to finish the homes.
iBuildNew can advise you on the current availability in Melbourne of turn-key properties from our range of builders and developers. Simply give Rob Puzzolo a call on 0438 888 885 or email rob@ibuildnew.com.au.
Zoe Langenberg
Zoe is passionate about coffee and interior design. You can find her most weekends exploring an art gallery or devouring a good book.
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