Melbourne Property Market EOFY Report
The end of the 2020-2021 financial year has revealed which Melbourne suburbs are the most popular for investors and owner occupiers. With the COVID-19 pandemic affecting the nation, people have been forced to spend more time at home and this has impacted preference for location to a significant degree. The pandemic has also driven a preference for bigger homes with more space due to lockdown restrictions and the necessity of spending extra time at home, though this trend could well reverse once the pandemic has been overcome.
Within the last half of the financial year (January, 2021 to June, 2021), real estate data showed a strong preference for properties in coastal and outer-city suburbs. Within the Melbourne region, Brighton was the most popular suburb for highly-engaged buyers. Conversely, inner city properties with small square metreage and high land values became less popular. Housing values in coastal and outer-city suburbs jumped within the 2021-2021 financial year. For example, homes in Shoreham, on the Mornington Peninsula, recorded a 44% rise in price.
In contrast, individuals looking to buy apartments concentrated their efforts in inner city suburbs. There were 602,140 highly-engaged buyers looking for units in the Melbourne CBD. Analysts have said that this might be due to desire to capitalise on recent weaknesses in those markets. The long-term investment potential of an inner city apartment which has declined in value is significant. Rental vacancies are still high in inner city areas, but, from an investor’s perspective, eventually international students will return, overseas migration will resume and demand for property in central locations will rise.
In May, the Victorian Government announced stamp duty concessions for inner city apartments. Buyer activity in the last half of the financial year has made up for time lost during the state lockdown from August to November, 2020. Overall, house prices in Melbourne have risen by 0.4% over the last financial year. Regional housing prices are rising at a pace more than double that of the Melbourne CBD due to COVID-19.
The Reserve Bank of Australia cut the official cash rate three times in 2020, with the last reduction (in November) taking the rate to just 0.1%. At the same time, many brokers are offering record-low rates on home loans. These two factors have made it easier to buy property than ever. Furthermore, according to market data, the total number of property owners who refinanced their home loan increased by 27% in 2020.
For property investors, it’s important to keep accurate records of expenses and property occupancy at the end of the financial year. Capital gains or depreciation are also important. Financial evidence is needed to successfully complete a tax return at the end of the financial year, so ensure you have a record of all financial transactions regarding your property.
Pillar Financial is open to take your call Monday to Friday, 9:00am to 5:00pm. Call our friendly team on 1300 730 309 or reach out via our contact page to ask what we can do for you as you begin or continue your journey towards buying a residential property in Melbourne.