The Melbourne property market is a wild ride for investors as we head into 2023, with a big gap between the best and worst performers.
Take Windsor for example, which not so long ago was a red hot Melbourne suburb for house price growth, but one that fell by more than 14 per cent over the last 12 months.
While buyers may have been burnt in suburbs like Windsor, on the other side of the ledger were suburbs like Keilor East, which returned 20 per cent for investors over the same period.
Property prices in Melbourne across the board are expected to fall around another 10 per cent in 2023 but as you can see, there are some big price discrepancies in this torrid market that provide opportunity for investors.
Top 10 suburbs for house price growth
|
Suburb |
12 months to Sep-22 quarter |
Annual change |
Days on market – Sep 2022 |
|
Keilor East |
$1,100,000 |
20.2% |
44 |
|
Rosebud |
$896,500 |
18.7% |
17 |
|
Narre Warren South |
$818,000 |
18.0% |
29 |
|
Caroline Springs |
$772,500 |
17.0% |
28 |
|
Mount Martha |
$1,806,900 |
16.6% |
36 |
|
Beaumaris |
$2,205,000 |
16.4% |
42.5 |
|
Fraser Rise |
$730,000 |
14.8% |
31 |
|
Mount Evelyn |
$900,000 |
14.6% |
18 |
|
Wollert |
$710,000 |
14.5% |
36 |
|
Clyde North |
$750,000 |
13.3% |
27 |
Biggest falls in Melbourne house median values
Director of A Game Property Advisory, Jim Malamatinas, told Australian Property Investor that cheaper suburbs were now at a price level that was very attractive to investors and first-home buyers.
Mernda, South Morang, Kilsyth and Ringwood East were four Melbourne suburbs that Mr Malamatinas sees as having market value next year.
“The price falls we have seen in recent months will not last forever, and these suburbs are showing early indicators that market conditions could be levelling out, meaning the price drops could end soon,” he said.
“At some point buyers will realise that month-on-month price falls may be ending, with these suburbs having a particularly high likelihood of seeing demand from multiple buying groups.”
Other suburbs that present affordable opportunities that are also close to the city include Maidstone, which is less than 10 kilometres away with a median price of $829,000, West Footscray, and Coburg North.
Mr Malamatinas said it’s always hard timing things exactly right at the very bottom of the market and expects more volatility ahead, but this could be the best time to buy a property.
“The pent-up demand from all the ‘wait and see’ cohort will only be exacerbated with the commencement of government planned record levels of migration in 2023,” he told Australian Property Investor.
“Rental demand is at its all-time high, with the worst rental crisis in almost 20 years and Melbourne tenants are relying on private landlords to help solve the problem as soon as possible.”
Increased costs associated with building since COVID has meant more buyers are looking for new homes rather than building their own from scratch of doing heavy renovations on an old home, according to Fletchers Executive chairman Jeremy Desmier.
“New or near new homes and townhouses are outperforming most other market segments in the eastern suburbs,” he told Australian Property Investor.
“I attribute this to the massive increase in building costs since Covid, estimated to be 30-40 per cent, so many people have abandoned plans to build a new home with a bespoke or volume builder.
“Others have done same where they had invested in architectural plans for major extensions, in favour of buying something new or near new, ready to move into with nothing to spend.
“Land value propositions that were extremely hot property 12 months ago have probably seen the biggest downwards adjustment.”
