Focus on Melbourne Property Investment

Figures released by the Australian Bureau of Statistics earlier this year have shown that Melbourne’s population has increased by 49,000 in the 2005/2006. To put that figure a different way, around 1,000 people each week come to the city to live. These figures make it one of the fastest growing cities in Australia.

But what has this influx of people done to property prices? Is it worth investing in the city? The population growth means that demand is strong and this pushes up property prices. It has been reported that in the more desirable areas of the city, demand for housing is outstripping supply. If the current influx of people continues, it looks likely that there will be no change in the near future, and this will see house prices increasing rapidly.

Property prices are growing around 6.5% a year with many prestige properties seeing double figure growth. Over the last decade, the Victorian Valuer General has reported that property prices have grown 15% on average each year – an excellent return on investment properties.

As with anywhere, your choice of area and property is key. The five suburbs that are current property hot-spots are Tyabb, St, Kilda West, Doreen, Cape Schnanck and West Melbourne, all of whom who have seen double digit percentage increases in the past year on the average house price.

The bubble is not likely to burst in the next few years so if you are looking to buy investment property in Australia, Melbourne looks like a good bet. Traditionally, Sydney has always been around 20 to 25% more expensive than Melbourne. However, comparing inner city flats between the two cities shows a disparity of around 45% meaning there is probably still a lot of sustainable growth left in the Melbourne property market.

There is also an increased demand from immigrants, many of whom are looking to rent. This is good news for investors as it means the rental market is buoyant and you should be able to receive a steady rental income.

If you are looking to buy, we would advise the middle and outer suburbs. There are many inner-city high rise blocks with almost the same look meaning there is nothing special or unique about them. They also run the risk of architectural aging where the style goes out of fashion so it is probably better to buy something slightly larger slightly further away from the centre of town.

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  1. From Australian Property Investors Won't Invest in 2009 | Australia Real Estate | Australia Property | Buying Foreign Property | Jun 30, 2009

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