Broadly speaking, Melbourne has underperformed both Sydney and Brisbane by a considerable margin over the previous 12 months. Melbourne has experienced more lockdowns than either Sydney or Brisbane though. In saying that, however, is it all about lockdowns or have other factors also contributed to Melbourne's underperformance? I'm asking the above question in the context of Sydney's future performance...if the current lockdown in Sydney is extended for months...?
Looking at high level numbers for Melbourne can be very uninformative. It does not posses natural land constraints that Sydney has so the market doesn't usually perform as one. What you will find if you dig into the numbers is that "premium" land constrained suburbs I.e. inner east west north, inner bayside, Mornington etc and school zones are doing extremely well whereas the general unit market, smaller properties and less desirable suburbs or high supply areas not so well. Yields in Melbourne are also generally horrible compared to other areas which is probably turning genuine buy and hold investors away. Furthermore, if this WFH culture prevails it will really hurt Melbourne in general as there are so many "affordable" options within 1-2 hour commute from the cbd and cheap units everywhere.. for critical PPOR demand masses to form there really needs to be something special attracting people to the area. For the market in general, alot of the future prospects will come down to quality migration and lower interest rates (depreciation of cash). How are the regional doing?
Interest rates expected to rise in 2024? Some experts saying earlier 2023? Immigration, wont happen any time soon with our zero covid policy… “fortress Australia” mentality. In fact I think globally we are going to be left behind Rents are shocking in Melb, huge red flag here that many investors are ignoring as they believe boom cycles will continue. Wait till IR rise ?? In saying this, if I was buying in Melb to live I would be looking at lifestyle locations ie Mornington, Barwon Heads. These are making sense, the boat has already sailed
Spot on, check out some of the examples posted in the "Melbourne is hot" thread. Examples of same or similar houses selling for 50% more than 2018/9 downturn in sought after suburbs
In terms of hypothesizing about Sydney's broader market in the coming months I guess my key question is: to what extent have the COVID lockdowns affected the broader Melbourne market? The vast majority of regions are still doing very well and continued COVID lockdowns in Sydney will drive even more people and thus more money to the regions too...
Lockdowns = more savings + increased desire for larger homes Apartments suffered relatively Whether one picks regional vs city will be based on relative prices. Higher prices in Sydney will drive more out to regional. It has also accelerated retirement plans - could be a once off though.
I think this chart has more to do with Melbourne's performance than lockdowns. Melbourne's issue is that so many of its residents had only moved there during recent years. That makes them far less embedded to the city, and far more likely to leave when things get hard. Everyone in Melbourne will personally know someone who has left to chase a better lifestyle; sun, space, beaches, the things that Australia is known for. Other facts about Melbourne: highest number of new dwellings under construction of all cities as MTR points out, only city where rents are still declining The fundamentals of this city were built on population growth. Sydney started stabilising its dwelling approvals numbers back in 2018 when population growth stalled. they were already down the path of correction when COVID struck so the shock has been far less. Melbourne was in full swing of turbocharged development pipeline and population growth reliance. Its problems are far deeper than any other Australian city, and any that could be caused by a snap lockdown.
To put it another way, here is the number of new people to the state per new dwelling constructed. A typical threshold (for all states except SA) is 2. when there's less than 2 people per new dwelling, a city tends towards oversupply. So once the city's line falls below 2, its risk increases. a little dip below is easily absorbed. a deep, prolonged dip (e.g. WA) spells big trouble.
There are many markets within Melbourne (I am sure same as Sydney and Brisbane as well) but the last 6 months have been as strong for Melbourne as I have ever seen it. For well located houses in good school areas prices have lifted 15-20% in the last 6 months Here's a couple of examples (6 months and 30 months) 1. https://www.realestate.com.au/property/103-landscape-dr-doncaster-east-vic-3109 floor plan has major issues sold december 2020 1.41M then sold June 2021 1.62 2. https://www.realestate.com.au/sold/property-house-vic-box+hill+south-129387098 Feb 19 1.04M and then last weekend https://www.realestate.com.au/sold/property-house-vic-box+hill+south-136537434 1..676M Doesn't really scream underperformance to me but I am sure there are segments which have not done well. I am sure people who bought certain apartments in docklands early 2000 have barely broke even
Yes, and doesn't look like growth has stopped either 40 Gloucester Drive, Heidelberg, Vic 3084 https://www.realestate.com.au/sold/property-house-vic-heidelberg-136590550 47 Gloucester Drive, Heidelberg, Vic 3084 https://www.realestate.com.au/sold/property-house-vic-heidelberg-136046498
$1.560M 20% Deposit $312k Repayments P&I @ 4% average $6k plus rates & maintenance. let`s call it $75k year. I wonder how much money people earn & spend to keep the family going.
