It’s a great time to be buying property in Melbourne. Following the recent back-to-back interest rate cuts there’s been a strong increase in activity at open home inspections, and all signs are the city’s upcoming spring selling season will be a busy one.
This comes as no surprise to veterans of the Melbourne property market such as Don Gallicchio, managing director of Galldon Real Estate.
If there’s one thing he’s learned over almost 30 years in the business, it’s that slowdowns in Melbourne’s property market never last long.
“Property in this city has always been a good long-term investment,’’ says Don. “A Melbourne home that would have sold for $120,000 in 1991, when I was starting out as a property management cadet, you’d be lucky to get today for a million.’’
Melbourne’s exploding population means constant demand for more housing, says Don. The city is predicted to grow from around five million residents now to nine million by 2046, and within the next decade Melbourne will overtake Sydney to become Australia’s largest city.
With supply failing to keep up, constant prices rises are the inevitable consequence.
In inner Melbourne in particular, insatiable demand means property price growth may level out at times but never turns negative, say Don.
“At Galldon, our main focus is on inner-city and CBD apartments,’’ says Don. “It’s a mature, stable market with good yields compared to the suburbs. Prices here may occasionally stabilise for a while, but they don’t fall.
“If you look back over the past few decades and break them up into five-year or 10-year blocks, then you’ll see prices always go up.’’
Don has sold and managed off-the-plan sales for many major Melbourne apartment developments, including Eureka Tower, QV, Hero, Temple Court and Docklands.
“We have decades of experience in this market, and we sold many of the units in these developments off the plan, so we get so see how they appreciate over time,’’ he says.
“For example units that we sold in QV for $280,000 are now selling for $400,000. Eureka apartments that we first sold for $400,000 to $500,000 are now selling for around $1 million.
“With so many people wanting to live in inner Melbourne, as a property owner here you can’t go wrong.’’
On the rise
Don says the market is now exiting a brief period of price stabilisation and values are set to begin increasing again, meaning it’s an ideal time to enter the market.
“Looking ahead from where we are at the moment, I expect that we should see small growth in the short term, and then much stronger growth in the long term,’’ he says.
“Right now it’s a good time to buy, whether for owners or investors. With prices still relatively stable and at the same time banks loosening their purse strings, we are already seeing increased traffic at our openings for inspection.’’
The solid performance of CBD and inner-city property values is also reflected in strong yields and extremely low vacancy rates for buy-to-rent investors, says Don.
“Rents for CBD apartments have never fallen - as with purchase prices, they might sometimes stabilise and increase a bit more slowly, but they don’t go backwards,’’ he says.
‘’And demand from tenants is always really strong. Right now, for example, the vacancy rate of our managed properties is under 1 per cent.’’
While the inner city and CBD have a high population of students, who are an important part of the rental market, inner Melbourne is increasingly becoming a place where families want to live, says Don.
“In recent years we have been getting more young professionals with families moving in, especially now that schools are opening up in the CBD such as the city campus of (elite private school) Haileybury, which is opening in West Melbourne.
“At the same time we’ve also seen more early-learning facilities opening, and this is bringing in a new mix of people and creating new demand.
The market certainly has changed and matured a lot since I started in 1991, but one thing that stays constant is the steady appreciation in prices.’’
If you’d like Don’s expert advice on buying property in inner Melbourne, CALL
0418 148 580 or email firstname.lastname@example.org