Melbourne Market Wrap

10.05.16 | Marc Barlow | News

The seasonal slowdown Melbourne gets every year as we head into the chillier months has begun with auction clearance rates starting to cool with the weather. Mind you, we are coming off a record few months for the Melbourne market and the clearance rates still point to a buoyant marketplace.


Looking back at the same time last year figures are slightly down but there have been some changes to lending policy and legislation which has caused some investors to sit on the sidelines for a while. There is also an election on the horizon which often has a dampening effect while prospective purchasers wait to see who will hold the balance of power for the next four years.


Saying that, the inner Melbourne suburbs continue to show the best growth rates, especially free standing homes which consistently outperform other types of residential property. Units have started to show a small decline but this doesn’t surprise me as developers continue to build what may be an excess of stock if foreign investors tail off in light of changes to the rules governing their activity.


It is always better to secure land with your property if possible and I was advised by a valuer years ago the land value should make up more than 60% of the overall property value, to ensure good growth into the future. Purchasing a house over a unit can also provide you with the added benefit of being able to possibly extend the home as your needs grow, saving having to move and the costs associated with that.


Units may be heading toward oversupply but the lifestyle benefits still make them an attractive option because you can get a foothold in a suburb where a standalone house might be too expensive. There are some fundamentals I always recommend clients watch out for, that can safeguard future growth. Avoid studio apartments and small, student accommodation options. A 2 bedroom unit is always best with a minimum floor area of at least 50 sqm of internal floor space, not including balconies, parking spaces or storage cages. I say this because some lenders don’t accept units that are smaller and that could hurt your future resale potential, if a prospective purchaser happens to bank with a lender who doesn’t accept your property in their lending policy. If you can find a 2 bedroom unit with 2 bathrooms or 1 bathroom plus an ensuite, your future growth is even more likely because an investor could snap that up and rent it to 2 people on a share basis. You should be making sure a unit you buy has the widest possible appeal to all sections of the market.