VIC Where is the Capital Growth right now in Melbourne?

Hey, so where I work uses an advanced algorithm to look at where capital growth is happening right now in the market, and where it's likely to continue in the short term. The computers work through huge data sets analysing and weighting stats in combination, such as:

Auction clearance rate (ACR)
Days on market (DOM)
Percent stock on market (SOM%)
Percent renters in market
Online search interest (OSI)
Avg vendor discount
Statistical reliability (SR)
Gross rental yield
Vacancy rate
Typical value (TV)
Ripple effect potential (REP)
Unit to house value (U2H)
Neighbour price balancing (NPB)
Market cycle timing (MCT)
...and a bunch more...

Anyway, the really interesting thing that I've just seen today is a gradual yet huge change in the housing market's growth compared with that of the unit market i Melbourne.

In short, it looks like housing is really close to its peak, especially in the affluent Eastern areas.
On the other hand, the Northern and South Eastern Corridors for units is now more aggressive than it was in the fever pitch of 2017.

This may be because the FHOG is still in effect. It may be because housing prices have surged whereas unit prices have plodded along over the last three years.

Here take a look:

Units:

Units by Jake Milne posted 1st Feb, 2018 at 5:45 PM

Houses:

Houses by Jake Milne posted 1st Feb, 2018 at 5:45 PM

The darker the shaded area the higher the imminent capital growth. All of these suburbs though are filtered to be above a score of 90%, thus we're looking at the top 10% of suburbs for CG only.

What do you think?
Will units out perform houses in Melbourne 2018??

 

Nope

 

I seriously doubt it. Maybe some markets will see units outperform but I think overall in 2018 houses will come out on top.

 

Had someone tell me units should start outperforming houses because units haven't grown at the same pace as houses and are just starting to catch up. However, the person who said this was an agent about to auction off a 2 bedroom apartment in Seddon.

 

Why do you think so?

 

Units have taken off like a rocket in Frankston. Why haven't you included it on your map?

 

Errr....nope...units...seriously.......any chance you might get sometin' right..??? Only a few year a go you poo poo'ed Geelong...and the outer suburbs.......me thinks no cred....

I don't buy on gut feel ...I buy on boot on the ground research......

 

Supply coming in the markets and overall demand for units vs houses in many of Melbourne's markets. Also from what I'm hearing from ppl on the ground . My 'sense' says overall houses will do better in 2018.

 

So where are problem areas Leo...do tell....

 

I’m seeing units doing better than houses in the areas I’m work in at the moment. Inner North Melbourne.

 

Depends on the suburb...only if it has tight supply of units...I can understand inner areas in SOME areas...but the supply is coming through fast....

 

Inner city, Southbank and Docklands for starters.

 

Ha-ha!

Didn't want to zoom out any more for the screen shot Wattledo; only the inner/ mid rings fit on screen at this zoom

Hi Sash. I'm sorry you got banned from this forum before because of your comments in one of my threads. If you want to hold a grudge for more than two years, then that's your choice. I'm not going to go back and forth with you, if you feel that I have 'no cred' that's okay plenty of others, including myself think the oppposite. Hope your portfolio is doing well

Interesting, how are you noticing this?

 

Carlton:


Fitzroy:


Collingwood:

 

Yeah, pretty much the same story across Melbourne for units vs. houses over this last big run.

Will be interesting to see if more suburb's unit markets start behaving like this or not:

Also wondering, can this growth seriously continue!?

 

Any particular area you still see good value in homes mate?

 

i think selected units will start moving as prices of of landed houses properties becoming expensive.

Even 2 bedroom apartments are more expensive in inner fringing suburbs compared to 2-3 years ago.

like balwyn, camberwells etc - prices of units will rise - as many can't afford the landed houses and there is limited land supply for them there.

but if you'r expecting prices of units to skyrocket in say albion etc. it would seem unlikely.

 

So tricky to define "good value" because what's often "cheap" now may not be good value long term.

So working with the definition of "areas that are low priced which still seem to have growth in them for 2018, without considering long term fundamentals":

1. Select pockets within the HUME LGA that aren't too close to H&L green sites.

2. The cheaper inner Western suburbs that will benefit from the Yarraville to North Melbourne tunnel (if it gets completed)

3. Inner South & East suburbs of Geelong

What do you think?

 

@melbournian, echo your thoughts with the continued unit growth but not skyrocket growth like houses have had.

If houses flatten this year or like in Sydney go backwards in some suburbs then maybe units have the potential to outgrow houses over the next 12 months (but no where near houses in the last 5 years).

I'm excited to see February 2018's data to see if there's any more insights!

All I know right now, is that, over the course of the last 6 months demand in units has changed overall seemingly for the positive in certain pockets like Preston (as graph above). For unit owners and 2018 investors I'm hoping that growth does continue...

 

Thanks @Jake Milne . I'm not really sure where the value is atm as i haven't been focusing closely on melb much since last cycle . Makes it a little trickier when you only buy development sites. Personally, I'd be looking at inner and mid ring areas to see what the numbers look like and if they make sense or not. I tend to like buying closer to the CBDs, except with Sydney , happy to go upto 50km from cbd. I do know that certain unit markets are precarious atm and not just for suburbs in Melb but other states too.