WHAT does the new year have in store for Melbourne property buyers?

We asked CoreLogic RP Data Victorian market expert Robert Larocca and WBP Property Group valuations manager Adrian Graham to look into their crystal balls and throw some light on what different buyers can expect from 2015.

First-home buyers

RL: It will continue to be difficult for first-home buyers to break into the market. It is going to be outer suburbs or high-rise accommodation in the inner city for them. There doesn’t appear to be any change in financial assistance or reduced taxation on the horizon for them.

AG: The first-home market will still be very competitive and that competition will continue to make it difficult for first-home buyers looking to buy at auction in Melbourne.


RL: Investors have been playing a larger role over the past year or so and I see no reason why that would change. The biggest question for local and international investors is whether Melbourne will remain an attractive place to invest their money. I think it will. That’s why last year’s strong level of investment activity will continue this year.

AG: More investors will come in to the market due to low interest rates, SMSF (self-managed super funds) opportunities and the potential for capital growth. Inner suburbs will be the main focus due to higher capital growth opportunities and more investors will buy apartments due to affordability.

Unit buyers

RL: High-rise apartments in the inner city are unlikely to see much capital growth in the short-term due to the high level of supply. Those looking for better capital gains in the short-term should focus on areas with strong demand for property and reasonable underlying land values. Location matters as much for units and apartments as it does for houses.

AG: There will be strong competition for older established units and apartments within the 10km of the CBD and therefore good value growth. Price growth and sales in modern and off-the-plan units will be patchy because of the high amount of supply coming through.

House buyers

RL: Detached housing in the inner-city saw strong growth last year but the market will probably be a bit flatter this year. We probably won’t see the same rate of price growth. The middle suburbs will provide those priced out of the inner suburbs the opportunity to buy established housing on reasonable blocks. New growth areas are not where you would buy for capital growth.

AG: The housing segment will be the market’s strongest. We are predicting steady growth of 7 per cent to 9 per cent within 10km of the CBD. Growth will be driven by low interest rates, continuing strong demand and relatively low stock levels of good housing.

Inner suburbs buyers

RL: Increasing growth and population in inner Melbourne is a certainty. There will be more apartments coming up while demand remains strong from local and international investors. But a lot of factors will play into that, including the exchange rate, price decisions by developers and approval decisions by government.

AG: Houses in inner Melbourne, particularly for period homes close to the villages, will be in high demand. We predict houses under $2 million within 10km of the CBD will be the strongest sector of the market. They will have the most demand and highest price growth.

Outer suburbs buyers

RL: The state of the economy will impact this segment of the market. It will be hurt if unemployment continues to rise but helped if interest rates remain at the current low level.

AG: We expect 0-4 per cent price growth for homes under $500,000 in the mortgage belt, 20km-plus out from the CBD. These areas can be impacted by significant supply in land and new housing. Small and middle-sized developers add a lot of supply in these areas that appeals to investors. That can apply downward pressure on values in some of these areas.

Posted by Neelima Choahan – Herald Sun on 17th January, 2015