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Trend Report: Recent Insights from a Top Buyer’s Agent in Melbourne

Trend Report: Recent Insights from a Top Buyer’s Agent in Melbourne 931 618 Andrew Stone

It’s been a tumultuous time for the Australian property market. With rising interest rates, soaring house prices, a lack of supply and an increase in demand, it can often feel like an unlevel playing field for those looking to buy. Despite these challenges, there are still plentiful opportunities for house hunters in Melbourne.

For starters, let’s take a quick look at the previous three years:

2021: Melbourne’s property market witnessed a meteoric rise in 2021, with median prices surging over +17%. 

2022: A turbulent period as home values plummeted by -9.6% from their February peak, according to CoreLogic. 

2023: Momentum shifted significantly compared to the previous year. In November, however, things took another turn as Melbourne property prices declined slightly.

That aside, what’s in store for 2024? Below you’ll find expert picks, predictions and answers to burning questions from a seasoned buyer’s agent in Melbourne. 

A Snapshot of the Current Property Market 

The Australian property market in 2023 surpassed expectations as property prices surged despite rising interest rates. This surge revealed a stark shortage of listings, driven by heightened buyer demand – resulting in price hikes that even seasoned economists found surprising.

Looking ahead, here are some major points that keep resurfacing: 

  • Melbourne’s median house price currently sits at around $1,050,000, according to Domain, while its median unit price is close to $570,000.
  • Those figures are respectively 4.1% and 5.5% lower than their previous price peak, but are expected to grow in the new year.
  • Melbourne house values are tipped to rise between 2% and 3% in 2024 and those of the city’s units are forecast to climb 3% to 4%.

It’s no secret that buying a property in Melbourne has become increasingly challenging. To navigate through these obstacles, having a top buyer’s agent on your side can make all the difference.

What Property Markets in Melbourne Are the Strongest?

While the overall market may have experienced fluctuations due to various factors, there are specific regions within Melbourne that have remained resilient and continue to attract potential buyers.

CBD: The standout market was the City of Melbourne (the CBD and near-city suburbs like North Melbourne and Carlton), which is rising on the emerging national trend of buyers opting increasingly for apartments as a lifestyle choice or an affordability measure. 

City of Yarra: The nearby City of Yarra also had four rising markets (Abbotsford, Clifton Hill, Collingwood and Fitzroy) and two recovering ones among the seven suburbs in the analysis.

The City of Casey: in the far south-east, which previously had many declining suburbs, had three rising and nine recovering suburbs (including suburbs like Doveton, Botanic Ridge, Cranbourne and Endeavour Hills) among 15 suburbs in the analysis of June Quarter activity.

Frankston: The neighbouring City of Frankston was another market showing emphatic signs of recovery.

The Mornington Peninsula, previously a national leader in price growth but past its peak in the past 12 to 18 months, is also showing increasing evidence of recovery, including in the prestige suburb of Sorrento.

The outer-ring municipalities perhaps best illustrated the recovery trend in the Greater Melbourne market. Outer-ring LGAs in the north and west, including Whittlesea, Hume, Wyndham and Melton, also demonstrated the recovering theme in the Melbourne market. The revival trend extended to middle market precincts like the City of Whitehorse, including the suburbs of Box Hill and Burwood East.

What About Vacancy Rates? 

In line with nationwide trends, vacancy rates in Melbourne have remained at record lows, and this trend shows no signs of changing anytime soon. In the real estate sector, vacancy rates refer to the number of vacant properties that are put up for lease. A low vacancy rate, therefore, means that very few properties listed fail to secure tenants.

Over the past few years, Melbourne has experienced a significant increase in population, driven by factors such as job opportunities and a thriving economy. This influx of people has created a high demand for rental properties, resulting in an extremely competitive rental market.

As of the latest data, the vacancy rate in Melbourne’s Outer East is 0.6%. This is welcome news for investors as it means less time from purchasing a property to a new tenant signing a lease agreement.

A low vacancy rate indicates that a property has strong rental sales while a high vacancy rate suggests that a property is not renting well. Areas with a low vacancy rate will ensure a better yield for investors as their properties are less likely to remain vacant after a tenant moves out. 

Population-Driven Housing Demand

In 2024, population growth continues to be a significant factor influencing the housing market, with domain analysis indicating its lasting impact on property prices. Australia’s population increased by 2.2% year-on-year, mainly driven by net overseas migration. Despite the expectation that temporary residents like students wouldn’t directly impact housing demand, their influx has created a ripple effect, increasing demand across various segments of the market. This population-driven demand is anticipated to exceed the current housing supply.

Economists emphasise the necessity of building more houses to address this shortage, highlighting that even if immigration were to halt, there would still be a substantial housing deficit. The national cabinet’s target of constructing 1.2 million homes is seen as crucial in alleviating these pressures created by immigration.

Get More Insights from Expert Buyers Agent in Melbourne

Our buyer’s agents and advocates specialise in the Melbourne property market, analysing trends, measuring the potential for growth and much more. Therefore, your advocate is there to provide expert analysis and support throughout all phases of the investment process in areas like Surry Hills, Kew East, and Doncaster.

The groundwork begins at the pre-selection strategy phase. Here, you will work together to find a suitable location, price range and property type. This often involves the creation of suburb analysis reports. From here, your advocate will generate detailed feasibility reports, deal with external consultants and finally, assist with any aspects of the final handover.

Contact us today to arrange a consultation with a buyer’s agent in Melbourne.



The Supply-Demand Imbalance in Melbourne is Scary

The Supply-Demand Imbalance in Melbourne is Scary 612 459 Andrew Stone

Rental prices have boomed across Melbourne over the last 2 years. The below graph shows overall Asking Rents are up 28% for Units. Melbourne Inner City has increased twice as much.

It wasn’t long ago that many predicted high vacancy rates for years to come. So many cafes, bars, and restaurants were brought to their knees during lockdowns. The vibrancy of our great city was put in question!!

So what has driven the big jump in rental prices? 

Landlord were always going to pass on higher holding costs and taxes imposts when they could. But there are definitely more variables in play.

Overseas migration has been massive. The below graph shows that over 2,000 migrants settled in our city each week last year. Actual numbers were 67% higher than Government projections one year prior. Seriously.

With our population growing faster than ever, you would hope that new building supply is ramping up. It’s not. 

The below graph shows how dire the situation is. Multi-Dwelling Planning activity has fallen off a cliff. Last year, just 16,025 new dwellings were approved across all Melbourne Council Areas.

The systemic Supply-Demand pressures that have led to a Rental Crisis will invariably impact the Sales market across the city. 

More than 70% of the Permanent Migration Program is Skilled based. We’re talking Medicos, Engineers, Professionals… After renting, these new Melbournians will will have the desire and ability to purchase in coming years.

Expect a lot more news and debate about population growth and housing supply in coming months – for good reason.

House Prices Have Doubled 5 Times in 40 Years

House Prices Have Doubled 5 Times in 40 Years 2560 1704 Andrew Stone

Darebin is a Council Area in Melbourne’s north that trends pretty closely to overall Melbourne market. The below graph shows when House Prices doubled in value over the last 4 decades.

It’s taken anywhere between 3 to 10 years for prices to double. Three further insights jump out from this graph:

  1. Gee it would have been good to have bought a house in 1997 – values doubled twice in the following 12 or so years.
  2. It looks like hockey stick growth from 2011.
  3. We’ve copped some nasty bumps in recent years.

Another way to view Price Cycles is looking at Year-on-Year % Changes. At any given time, were House Prices higher than the previous year or lower?

Considering the 3 points above.. The mid 1990s were absolutely a great time to purchase given the 15+ years of uninterrupted capital appreciation. 

The % growth from 2011 hasn’t been unusually high. The 1st graph suggests hockey stick growth from 2011 because the $ value levels are so much higher than previous decades (e.g. 15% growth from $600,000 is a lot more in dollar terms than 15% growth from $50,000).

Lastly, in 2018/19 we experienced the sharpest market correction in living memory. Price growth returned for a few years but then 2022/2023 came along!! Price drops are pretty rare, so it’s natural to feel beaten up over the recent topsy turvy market.

Many variables drive market downturns. We’ve highlighted what we think are the major causes in the 2nd graph above: global economic shocks, supply/demand imbalances, government interventions, and interest rate rises.

What to expect in coming years?

For Darebin House Prices to double from September 2000, they need to rise by $1m. That sounds fanciful, but I’m reminded of my wife telling her Dad “You’re crazy for not buying two Houses in 1997 for $100k each!”.

House Price growth will return. I encourage you to consider your finances and get ready to take advantage of the next upswing.

How Buyer’s Agents Add Value to Your Property Investment

How Buyer’s Agents Add Value to Your Property Investment 1086 611 Andrew Stone

Property investment can be very rewarding, but navigating the Australian real estate market isn’t always a walk in the park. Property investment has its fair share of risks, demands considerable time, and incurs expenses. It’s clear there’s no substitute for expertise, and this is where partnering with the right buyer’s agent can make a world of difference. 

Buyer’s agents are professionals who have an in-depth knowledge of the Australian real estate market and help match investors with their next purchase. Using a wealth of experience and expertise, they take the stress out of searching for a new investment property and simplify the entire process.

In this guide, we’ll explore the pivotal role buyer’s agents play in your property investment journey and why having one by your side can guide you towards success and growth. 

Understanding the Role of a Buyer’s Agent 

Buyer’s agents, also known as buyer’s advocates, are your dedicated allies in the property game. Their primary task? To find the perfect property that aligns with your investment goals. From scouring public listings to uncovering hidden gems off-market, their expertise is your shortcut to a streamlined property search. 

Unlike real estate agents who represent sellers, buyer’s agents solely work in the buyer’s best interest. Their only objective is to identify and secure properties that align with the buyer’s goals, preferences, and budget.

Are you on the lookout for a buyer’s agent in Melbourne? Discover more about the role of a buyer’s agent in real estate and property purchases

5 Ways Buyer Agents in Melbourne Add Value to Your Property Investment

With consumer confidence in the real estate market fluctuating, buyer’s agents are more important than ever. Essentially, their role is to protect buyers from potential downfalls and reduce the amount of time invested in researching properties. Buyer’s agents can provide a list of potential investment properties (often based on their expertise and experience), as well as access to exclusive deals and off-market listings that wouldn’t otherwise be available to the public. 

Read on to find out five key ways a buyer’s agent in Melbourne can add value to your property investment. 

1. Expert Market Knowledge

This is one of the main reasons why more and more investors are working with a buyer’s agent. Under this approach, you gain instant access to their unique and extensive knowledge of the local real estate market. A good buyer’s agent will have an in-depth understanding of local property trends, market conditions, and price movements. This keeps them ahead of the game and gives them the ability to help you make informed decisions towards a successful outcome.

Their expertise enables them to offer valuable insights and guidance for informed decision-making, so you are well-prepared to take advantage of investment opportunities. This may include identifying suburbs on the rise, as well as developments with real long-term prospects for growth.

2. Access to Off-Market Properties  

For real estate investors, tapping into off-market properties is one way to secure the best possible investment. These are properties that you won’t find on Domain or Using their own personal network and pool of resources, buyer’s agents are in a unique position to provide access to exclusive listings and give their clients the best chance to take advantage of lucrative off-market opportunities.

From individual investors looking for growth opportunities to families searching for a new home, these agents ensure their clients receive the best deals available. By connecting you with this broad range of properties, buyers can have peace of mind knowing they are selecting from the best options available today.

3. Property Research and Assessment 

Property research and due diligence are fundamental to any successful real estate investment strategy. Here, buyer’s agents take the reins and work hard to carry out thorough investigations into the various options available. They also use market data, historical sales figures, comparable property prices, and other relevant factors to arrive at accurate recommendations that fit your goals. This ultimately helps to mitigate risks while still prioritising growth within your portfolio.

Buyer’s agents also bring a keen eye for property assessment. Their experience allows them to evaluate properties accurately to provide you with the necessary insights to make investment decisions that align with your financial objectives.

4. Skilled Negotiation 

Negotiating the purchase of a property is often a complex process that requires specialist knowledge and skill. Fortunately, this is another area where buyers’ agents really kick into gear. In addition to their real estate market analysis, the best buyer agents in Melbourne are also expert negotiators. They have the experience and resources to negotiate on your behalf, and know how to secure favourable terms for you. With their knowledge of the process and understanding of the current market conditions, they can help you make sure that your property investment is a profitable one.

Negotiation is an art, and buyer’s agents are the artists. To learn more about the art of negotiation, take a look at our negotiation blog. Their goal? To ensure you get the best value for your investment.

5. Streamlining the Buying Process 

As we noted earlier, pursuing property investment on your own is far from a walk in the park, even for experienced buyers. From searching for available listings to closing on the final purchase, a variety of legal and administrative steps must be followed for a successful transaction. 

Partnering with a buyer’s agent is one way to streamline the process. This way, they’ll be there to provide invaluable expertise and guidance from the property search to the final purchase. Your agent will provide assistance with everything from searching for properties to reviewing contracts and settlement arrangements, all while respecting your individual budget constraints. 

What’s more, having someone adept in real estate law also comes in handy when spotting potential issues so they can be addressed appropriately and promptly prior to finalising any agreement.

Their experience also helps to guarantee that all deadlines are met, paperwork is submitted correctly, and the entire process is completed as efficiently as possible.

Are Buyer’s Agents Worth It? 

Investing in property can be a complex and time-consuming mission to undertake without the right help. However, with the aid of an experienced buyer’s agent in Melbourne, you can overcome many of the uncertainties and challenges associated with investing in property.

Your advisor’s knowledge and experience will help you to minimise risks and maximise potential returns on your investments. Having access to tools such as cash flow analysis and asset selection services also allows you to make informed decisions that are tailored to your individual needs. Put simply, the road to successful property investment will be much smoother with their support and guidance. 

FAQs About Buyer’s Agents in Melbourne

1. Why should I consider working with a Buyer’s Agent in Melbourne for property investment?
Property investment involves risks, demands time, and incurs expenses. A buyer’s agent simplifies the process with extensive local knowledge, making informed decisions more achievable.

2. How does a Buyer’s Agent add value to property investment in Melbourne?
A Buyer’s Agent provides expert market knowledge, understanding local trends, market conditions, and price movements. They offer access to exclusive off-market properties and deals.

3. What role does property research play in the investment process with a Buyer’s Agent?
Property research conducted by Buyer’s Agents involves in-depth analysis using market data, historical sales figures, and comparable property prices. This approach mitigates risks and prioritises portfolio growth.

4. How does a Buyer’s Agent assist in negotiating property purchases in Melbourne?
A Buyer’s Agent excels in skilled negotiation, leveraging expertise and resources to secure favourable terms. Their understanding of current market conditions ensures the best value for your investment.

5. How can a Buyer’s Agent streamline the property buying process in Melbourne?
Buyer’s Agents guide you through the entire buying process, from property search to contract review and settlement arrangements. Their expertise in real estate law addresses potential issues promptly and efficiently.

Reach Out to an Experienced Buyer’s Agent in Melbourne 

For a smooth property investment journey in Melbourne, consider reaching out to experienced buyer’s agents in Melbourne at Property Analytics. Their valuable assistance and guidance can make a significant difference in your property search and negotiation process.

house key in a hand

The Role of a Buyer’s Agent in Real Estate and Property Purchases

The Role of a Buyer’s Agent in Real Estate and Property Purchases 2560 1922 Andrew Stone

Buying property is an exciting and significant milestone in life. At the same time, it can be expensive, complex and time-consuming – not to mention risky. A good buyer’s agent in Melbourne can simplify the purchase process, access more properties, and save you big money in the long run.

Buyer’s agents, as the name suggests, are professionals who aid buyers in securing a suitable property with a fair price to match. With their finger firmly on the pulse, they provide objective information, advice, and support throughout the buying process. Their expertise lies in tracking a property’s sale price and history, as well as monitoring its time on the market.   

Throughout this article, we’ll further explore the role of a buyer’s agent and how they can assist you with real estate and property purchases.  

What is a Buyer’s Agent and Why Should I Consider One?

If you’re unsure if a buyer’s agent is the right move for you or if you even need one, consider the following questions: 

    • Are you overwhelmed by the process of buying a property? 
    • Are you unfamiliar with certain aspects of the property market? 
    • Are you unsure of the true market value of a property? 
    • Are you time-poor and unable to research and view properties? 

    If you’re shouting ‘YES’ to any of these, enlisting the help of a buyer’s agent might be the smart choice to simplify your property purchase. 

    What is a Buyer’s Agent?  

    By definition, a buyer’s agent (also known as a buyer’s advocate) is a licensed real estate professional who specialises in working exclusively on behalf of property buyers. They act as your personal property advisor, guiding you through the entire process of buying real estate. Their main goal is to represent your interests, making sure you follow informed decisions and secure the best possible property at the right price.

    What Does a Buyer’s Agent Do?

    A buyer’s agent can offer numerous services including researching properties, arranging pre-settlement inspections, and tracking down recent sales figures. They also negotiate directly with their network of sellers and their agents to encourage the best possible outcome. 

    In addition to providing advice on a property’s fair market value, a buyer’s agent can also provide advice on financing options, loan terms, and related costs of purchasing a property.

    What a Buyer’s Agent Doesn’t Do

    Buyer’s agents do not sell properties. They represent property buyers to secure you a quality property with great prospects on the best possible terms.

    By understanding this distinction, property buyers can confidently place their trust in buyer’s agents across Melbourne knowing that their exclusive focus is on achieving the best outcomes for buyers without any conflicts of interest tied to property sales. 

    Why Should I Consider Teaming Up with a Buyer’s Agent?

    A Buyer’s agent by your side can provide numerous advantages, particularly in the Australian property market:

      • Expertise: Buyer’s agents in Melbourne have in-depth knowledge of the local market, including current property trends, pricing, and neighbourhood insights. This expertise can save you time and money.
      • Time-Saving: Searching for the ideal property can be time-consuming and fruitless. A Buyer’s agent takes the legwork out of the equation, allowing you to focus on your day-to-day.
      • Negotiation Skills: One of the key roles of a buyer’s agent is negotiating on your behalf. Their skills and experience can help you negotiate the property purchase price down more than you think!
      • Access to Off-Market Properties: Buyer’s agents often have access to off-market properties that are not publicly listed. This can give you a competitive edge in a tight market.

      At Property Analytics, we’re on your side. We’re seasoned buyer’s agents in Fitzroy and across Melbourne with years of experience and local knowledge behind us. 

      Understanding the Role of a Buyer’s Agent

      Now that you understand why hiring a buyer’s agent can be beneficial, let’s delve deeper into their role and responsibilities.

      The Search: Finding the Ideal Property

      The first step in the journey with your buyer’s agent is the property search. This involves discussing your preferences, needs, and budget. Based on this information, the buyer’s agent will curate a list of potential properties for you to consider. They have access to a wide range of resources, including databases, industry contacts, and market insights, which allows them to identify properties that match your criteria.

      This search process can save you from the overwhelming task of sifting through countless listings and conducting endless property inspections. Instead, you can focus your energy on properties that truly align with your goals.

      The Evaluation: Assessing Property Value and Potential

      Once potential properties are identified, your buyer’s agent will thoroughly evaluate them. This evaluation involves analysing property data, recent sales in the area, and the condition of the property. They will assess the property’s value and potential for growth, leaving no stone left unturned. 

      This step is crucial, as it means you are not overpaying for a property and that it aligns with your long-term investment goals. Buyer’s agents are skilled at identifying both the hidden gems and potential pitfalls that might not be apparent to the untrained eye.

      The Negotiation: Securing the Best Price

      Negotiation is where the expertise of a buyer’s agent truly shines. They will negotiate with the seller’s agent on your behalf, striving to secure the property at the best possible price. Their knowledge of the local market, recent sales data, and negotiation skills can be invaluable in achieving a favourable outcome.

      Additionally, buyer’s agents for Melbourne properties can help you structure your offer in a way that increases your chances of acceptance. This might involve including special conditions or terms that benefit you as the buyer.

      What Makes a Good Buyer’s Agent?

      Not all buyer’s agents are created equal, and choosing the right one is paramount to a successful property purchase. Here are some key qualities to look for in a buyer’s agent:

      Qualifications and Experience

      Confirm that your buyer’s agent is a licensed and accredited professional with a strong track record. Experience matters, as it equips them with the knowledge and skills needed to navigate the complexities of the real estate market effectively.

      Knowledge of the Local Market

      Local market knowledge is valuable, as property markets can vary greatly from one suburb to another. Your buyer’s agent should have an in-depth understanding of the specific areas you are interested in, including market trends, property values, and local amenities.

      Strong Negotiation Skills

      Negotiation is a critical aspect of an agent’s role. Look for a buyer’s agent who has a proven ability to negotiate favourable deals on behalf of their clients. They should be able to remain composed under pressure and advocate for your best interests.

      The Buyer’s Agent and the Investment Property Market

      For property investors, a buyer’s agent can be an invaluable asset. Investing in real estate involves significant financial commitments, and making the right choices is paramount to achieving your investment goals. A buyer’s agent can assist investors in several ways:

        • Market Analysis: They can provide comprehensive market analysis to identify investment opportunities with the potential for strong returns.
        • Risk Mitigation: buyer’s agents help investors minimise risks by conducting thorough due diligence on properties, ensuring they align with the investment strategy.
        • Portfolio Building: Over time, a buyer’s agent can assist in building a diverse and profitable property portfolio.

        How a buyer’s agent Can Influence Your Investment Decisions

        Buying a home or investment property is about as nerve-wracking as it gets. Buyer’s agents can influence your investment decisions positively by providing expert advice and access to exclusive opportunities. They can help you identify properties with growth potential, guide you in making informed decisions, and ensure you purchase properties that match your investment strategy.

        Investing in property can be a lucrative venture, but it’s not without risks. Having a buyer’s agent by your side can significantly increase your chances of success in the competitive world of property investment.

        Are you over the emotional rollercoaster that comes with the buying process? You can seek professional advice from our buyer’s agent serving Melbourne and surrounding suburbs. 

        The Financial Implications of Hiring a Buyer’s Agent

        It’s important to understand the financial aspect of engaging a buyer’s agent in Melbourne. Typically, buyer’s agents charge a fee, which can be structured in different ways:

        1. Flat Fee: Some buyer’s agents charge a flat fee for their services. This fee is agreed upon upfront and is not dependent on the property’s purchase price.
        2. Percentage of Purchase Price: Others charge a percentage of the property’s purchase price, often ranging from 1% to 3% of the property’s value.
        3. Combination: In certain cases, a buyer’s agent may use a combination of a flat fee and a percentage of the purchase price.

        Assessing the Value: Is a Buyer’s Agent in Melbourne a Good Investment?

        Whether you’re buying a home or an investment property, the decision to work with a buyer’s agent should be based on your specific circumstances, experience, and preferences. If you value expertise, time-efficiency, and a smoother purchasing process, the benefits of hiring a buyer’s agent in Melbourne may well outweigh any associated costs.

        For the sake of ethical conduct, it’s vital to uphold transparency in all transactions. If you decide to work with a buyer’s agent, discuss their agency relationship with you. This will help you gain a clear understanding of their obligations so your interests are appropriately represented.

        Frequently Asked Questions About Buyers Agents in Melbourne 

        How does a buyer’s agent get paid?

        Buyer’s agents are typically paid a fee for their services. This fee can be a flat fee, a percentage of the purchase price, or a combination of both. The payment structure is usually agreed upon in advance between the buyer and the buyer’s agent.

        Should I hire a buyer’s agent or a real estate agent?

        A buyer’s agent exclusively represents buyers, while a real estate agent can represent both buyers and sellers. If you want someone who will advocate solely for your interests as a buyer, a buyer’s agent is the better choice. Real estate agents, on the other hand, may have a dual agency relationship, which could present a conflict of interest.

        Is it necessary to hire a buyer’s agent?

        Hiring a buyer’s agent is not mandatory, but it can be highly beneficial, especially in complex and competitive real estate markets like Australia. If you value expert guidance, time-saving, and effective negotiation, a buyer’s agent can make the property buying process smoother and more efficient.

        As a trusted buyer’s agents for Fitzroy, Preston and beyond, we’ve prepared a list of everything property dos and don’ts.  

        Can a buyer’s agent represent the seller?

        No, a buyer’s agent’s primary duty is to represent the buyer’s interests. Their role is to assist buyers in finding and purchasing properties that align with their needs and goals. They do not typically represent sellers in real estate transactions.

        Get in Touch with a Buyer’s Agent in Melbourne Today

        A buyer’s agent exists as an invaluable partner in your real estate and property investment journey. At Property Analytics, our Melbourne Buyer’s Agents bring expertise, market knowledge, negotiation skills, and access to off-market opportunities to the table. Reach out to get timely market insights, for general advice, or to arrange a one-on-one consultation.

A blovk of apartment buildings in Melbourne

Is a Melbourne Apartment a Good Investment Opportunity?

Is a Melbourne Apartment a Good Investment Opportunity? 1000 669 Andrew Stone

Take a quick glance at the Melbourne skyline and you’ll notice it’s dotted with towering apartment buildings. 

It’s easy to get drawn into the idea that investing in these high-rise complexes is the ticket to boosting your property portfolio.

However, amongst all the hype and initial affordability of investing in an apartment in Melbourne, it’s important to be aware of the potential risks involved.

Negative equity, cramped floor plans, sky-high body corporate fees, sluggish capital growth, and pitiful rental yields; all of these are issues that can take a serious toll on your bottom line when it’s time to sell, and most of them are quite difficult to fix.

At Property Analytics, we know that long-term wealth is best created through asset appreciation, not through positive cash flow. Our best advice for clients is to purchase a property that will historically grow most in value over time. 

It All Starts With Your Objective: Positive Cash Flow vs. Negative Gearing

Some people invest in property to increase their monthly income, whereas others invest in property to build long-term wealth. One group looks for ‘positive cash flow properties’, the other for ‘negative geared properties’.

Put bluntly, you’re making a huge mistake if you buy an investment property for positive cash flow (where rental income is greater than mortgage payments and expenses). Instead, buy an investment property that is likely to grow in value – you’ll be far better off for it. 

I advocate for investing in houses over apartments for a number of reasons. The main one being that houses have the potential for value growth, leading to greater returns in the long run. This means that even though you might be sacrificing a bit of cash flow now, you’re setting yourself up for the future.

Want more insider advice from expert buyer’s advocates in Melbourne? Dive deeper into capital growth vs. rental yield here.

The Upsides and Downsides of Investing in Apartments

Apartments in Melbourne City and surrounding areas have been gaining traction among property investors, and it’s easy to see why. Melbourne has been ranked as one of the world’s most liveable cities, making it an attractive destination for both local and international buyers.

An apartment could be a great buy if you’re solely focused on a rental yield strategy. With the right features and the right location, you could attract a steady supply of high-paying renters.

However, if you’re placing capital growth first, steer clear of investment properties in the form of apartments. Oversupply and lack of demand result in less property price growth, restricted finance options, and risky business for investors prioritising capital growth over rental yield.

Successful property investors generally don’t favour apartments, for the following reasons: 

1. Oversupply and Limited Demand:

Melbourne’s apartment market has been plagued by oversupply, which has resulted in reduced property price growth. Essentially, the abundance of available apartments has created a competitive market where demand is insufficient to match supply. As a consequence, apartment values may stagnate or even decline.

2. Restricted Finance Options:

Lenders often perceive apartments as riskier investments due to potential issues with quality, oversupply, and market volatility. Securing finance for apartment purchases can be more challenging compared to houses. Limited financing options, therefore, could be a major roadblock. 

3. Higher Risk for Investors:

Apartments generally have higher ongoing expenses such as body corporate fees, maintenance costs, and sinking fund contributions. If this is the case, additional expenses can eat into your rental income and erode your overall returns. The potential for market fluctuations and changes in apartment regulations adds an extra element of uncertainty and risk.

The Case for Investing in Houses

So, what does this mean for you as a smart, future-focused property investor? It means that apartments can enter high-risk territory if you’re pursuing a capital growth strategy. Instead, consider investing in houses. Let’s explore why. 

Houses as a Growth-Oriented Investment:

While houses may not offer positive cash flow initially, their long-term potential for capital appreciation is significantly higher compared to apartments. Houses are in higher demand due to their larger living spaces, land component, and potential for expansion or renovation. Investing in a house with good growth prospects can lead to substantial wealth creation over time.

Stronger Asset Value:

Houses typically hold their value better than apartments, especially in desirable locations with limited land availability. Land appreciates in value, while buildings tend to depreciate. By investing in a house, you are acquiring not only a dwelling but also a valuable asset with the potential for long-term value growth.

More Flexibility and Control:

Overall, houses offer greater flexibility in terms of rental arrangements. You can choose between long-term leasing or short-term rentals like Airbnb, allowing you to adapt to market conditions and optimise rental income. As an added bonus, as the property owner, you have more control over renovations, modifications, and maintenance, enhancing the property’s value and appeal.

Mitigating Risks in House Investments: Research and Due Diligence

Investing in houses requires a long-term perspective. Property values tend to appreciate over time, and by holding onto your investment property, you can benefit from capital growth and the potential to generate substantial returns upon resale.

Consider factors such as location, proximity to amenities, infrastructure developments, and the potential for future growth. Conducting due diligence on the property’s condition, legalities, and rental demand will also help to mitigate the risks and ultimately, make for a sound investment.

Maximise Your Return: Tips for Investing in Melbourne Houses

1. Location:

Always prioritise properties in desirable locations that are close to public transport, employment hubs, and lifestyle amenities. This will help ensure consistent demand and strong rental yields.

2. Research the developer:

Investigate the track record of the developer and the quality of their previous projects. This could be crucial in determining the long-term appeal and value of your investment.

3. Get to know the area:

Before purchasing a house, research the local rental market to ensure you’re investing in an area with strong demand and potential for growth.

Always remember to be as analytical and objective as you can when considering your next investment property. Here’s some advice from our buyer’s advocates in Melbourne. 

Determine Your Preferences: Finding the Perfect Melbourne Property Investment

What features should you look for in a Melbourne house? There are several factors to consider to ensure you make the right choice. First, think about the size of the house you’d like to invest in. Are you after a comfortable two bedder or a spacious double-storey townhouse? 

Consider the needs of your potential tenants and how much rental income you’d like to generate. By having a clear understanding of your preferences, you can narrow down your search and find a house that meets your investment goals.

Let’s take a look at several important factors including: location; size, layout, and design; building amenities; affordability; and finally the future of the suburb.

Location, Size and Layout 

Location is vital to the success of your investment and can be divided into two trains of thought. Firstly, look for properties close to employment hubs, schools, and public transport, ensuring a steady demand from potential tenants. Secondly, focus on houses that offer unique features or amenities that set them apart from the competition. This could include a balcony with a stunning view, or a backyard big enough for an entertainment deck. 

When exploring your options, remember to think about important factors such as size, storage space, bedroom and bathroom layout, living area, and how much natural light you’ll get. 

Affordability and Budget Constraints

The current housing market in Melbourne offers a range of prices for various types of houses in different locations. By conducting thorough research and working with a real estate agent, you can find a house that fits your budget and investment goals.

As with any investment, it’s essential to stay within your budget while still identifying properties with potential for growth and strong rental returns. Get to know the current Melbourne housing market and familiarise yourself with the price ranges for different types of houses in various locations. Don’t be afraid to explore up-and-coming suburbs, as they may offer more affordable options with the potential for significant growth. Keep in mind that while affordability is important, it should not come at the cost of quality or location.

Future of the Suburb

Another consideration is the future of the suburb itself. You may want to consult with a real estate agent or local council about planned developments in the immediate vicinity of the house you plan to purchase. For example, a large planned development next door to the building where you plan to buy could block out your view, and potentially lower your resale value if many more similar properties end up on the market.

On the other hand, an infrastructure project like shops or a cultural precinct could make the lifestyle in a particular suburb more appealing, and potentially improve the resale value of your house.

For the best advice on investment properties, development projects, and market insights, get in touch with the seasoned experts at Property Analytics.

Do Houses Appreciate in Value in Melbourne?

Historically, houses in Melbourne have experienced steady capital growth compared to apartments. However, the rate of appreciation depends on a variety of factors, including location, market conditions, and individual property attributes. By carefully considering these factors and making well-informed decisions, it’s possible to find house investments in Melbourne with strong growth prospects. Remember to weigh the potential rewards against the inherent risks to make the best choice for your investment portfolio.

Take it from the preferred buyer’s advocates in Melbourne. You can learn more about our property dos and don’ts here

What are Melbourne’s Most Liveable Suburbs on the Real Estate Market?

To most, a suburb’s liveability is a high priority. You may seek out areas that have the best to offer in terms of amenities and lifestyle. According to RMIT’s 2022 Social Infrastructure Index – which rates suburbs according to factors like access to services like health, education and community centres as well as access to sport and recreation – the top ten most livable suburbs in the Greater Melbourne area are:

  1. Collingwood
  2. Fitzroy
  3. North Melbourne
  4. Carlton
  5. South Melbourne
  6. Carlton North
  7. Richmond
  8. Flemington
  9. Windsor
  10. Fitzroy North

To chat more about the growth potential of Melbourne’s most liveable suburbs, get in touch with the number one buyers advocate in Melbourne: Property Analytics.

The Better Bet: Houses Over Apartments

When it comes down to the crunch, short-term gain often pales in comparison to long-term wealth accumulation.

Investing in Melbourne apartments for positive cash flow can be a risky venture due to oversupply, limited demand, and financing challenges.

On the other hand, houses provide greater potential for long-term wealth creation through capital appreciation. While sacrificing immediate positive cash flow may be necessary, the growth-oriented nature of houses makes them a more favourable choice for property investors seeking sustainable returns. 

Yes, investing in a house generally means that the rent won’t cover the mortgage (i.e. you’ll have to tip in your own money each week). But, if you’re able to sacrifice a bit of cash flow, you’d be far better off in the long-term.

And, of course, always enlist the help of a knowledgeable buyer’s advocate in Melbourne like Property Analytics.

Your Trusted Local Property Development Consultants in Melbourne

Looking for expert guidance in buying a property? Property Analytics is here to help. As reputable buyer’s advocates and property development consultants in Melbourne, we offer our expertise in various suburbs, including Templestowe Lower, Bulleen, Fitzroy, and Ivanhoe. Whether you’re searching for a dream home or an investment opportunity, our dedicated team of buyer’s advocates in Melbourne will assist you every step of the way.

Auction_Prices-Lines-Feature (1)

Why Auction Clearance Rates Are So Important to Watch in Melbourne

Why Auction Clearance Rates Are So Important to Watch in Melbourne 1289 828 Andrew Stone
Sign for residential real estate auction

Everyone is obsessed with Auction Clearance Rates in Melbourne!

Week after week, we have the media, real estate agents, and bodies like the REIV lining up to give us the stats.

You know how it goes. It’s “X% success from Y auctions” and “This week’s clearance rate of A% is B% higher than last week, month, or year”.

It all gets pretty tedious. But maybe there’s a reason why so many professionals focus intently on auction trends…

So, is it all just noise or is there something to clearance rates after all?

Well, you’ve already read the headline.

As you’re trusted property investment consultants in Melbourne, we’re going to tell you why auction clearance rates are important, but also what you can and can’t read into clearance rate statistics.

The Obsession with Clearance Rates Explained

If there’s one group of people who love crunching numbers, it’s real estate professionals.

Specifically, it’s commentators and data analysts in the real estate industry.

But the data that everyone wants – specifically house price data – comes with a lag. Commentators can’t provide meaningful weekly data about Median $ House Prices, but they can tell you about Auction % Clearance Rates.

And the thing is, clearance rates can tell you about property market performance and the direction house prices might be going, especially in cities like Melbourne and Sydney.

The Auction Clearance Rate is a percentage figure that tells you the proportion of properties that successfully sold at auction (although this definition can get fuzzy, as we’ll discuss later).

A high clearance rate (around 75%) may indicate strong market conditions, high demand for real estate, and rising property prices. When auction clearance rates are consistently around 75-80% you’re probably in a seller’s market.

A low clearance rate (around 60%) may indicate a sluggish real estate market, less demand for property, and the chance of dipping real estate prices. When properties consistently fail to sell at auction in the Melbourne market, you may be in a buyer’s market.

Auction Clearance Rates Indicate the Health of the Property Market

Brunswick is a suburb in Melbourne’s north that is, in many ways, representative of the broader Melbourne market. For the purposes of explaining the relationship between Auction Clearance Rates and Median $ Price Growth, we’ve looked at the sales history of Brunswick Houses since the turn of the century.

Over the last 17 years, Auction Clearance Rates for Brunswick Houses have averaged just under 79%. Median $ House Prices have increased every year but one (in 2011).

Looking at the graph below, we can see that auctions and prices are very tightly correlated. 

Auction Clearance Rates and Price Trends Graph

When Auction Clearance Rates are below average or declining, Year-on-Year (YoY) Median $ Price Growth is below average (9%) or trending downwards.

Said simply, this graph shows that auction clearance rates and house prices are moving in the same direction 72% of the time. Now that’s a correlation to pay attention to!

Auction Sales Lead to Higher Median Prices

The correlation between auction clearance rates and median house prices should be of no surprise to those who understand how auctions work.

Vendors determine the reserve price, effectively saying “I’m willing to sell at this price”.

The reserve price is arrived at by assessing market conditions, nearby comparable sales, and buyer interest over the course of the campaign. If proper analyses and professional advice are applied, the reserve price should be a reasonable estimation of market value.

When bidding at auction exceeds the reserve price, two things happen. The property inevitably sells, which increases the weekend’s auction clearance rates, and a new, more accurate market value is achieved.

So, higher clearance rates indicate that plenty of properties are selling above the reserve price.

Put enough sale prices together and you get a Higher Median $ Price for an area. When lots of properties are sold above reserve at auction, the Median $ Prices should rise.

The underbidders for each property will move on to other properties, and their assessment of market values will change based on recent results, leading them to bid higher next time!

So, high Auction Clearance Rates effectively act to stimulate the market by increasing vendor and buyer expectations. The opposite occurs with less auction success.

The Market Tends to Cool When More Properties Pass In

If only one or two parties are seriously interested in purchasing a property, then that auction rarely gets off the ground. In this scenario, the vendor’s reserve price is not met, and they have some serious decisions to make:

  1. Negotiate immediately with interested parties
  2. Move into a private sale campaign with a fixed price after already spending 6-8 weeks on the auction market
  3. Pull the property from the market entirely.

For options 1 and 2, the vendor has lost the leverage and prospective buyers are more likely to assess the property logically, with far less emotion clouding their offers. The ultimate sale price will almost certainly be below the initial reserve (read this article for more on bidding at auction and when a property is passed in).

If the vendor chooses option 3 and delists the property, then a clear message has been sent to the market that sale price expectations were too high. Whether consciously or not, active buyers will take that message on board and will proceed with more caution when considering other properties.

What Else Can Affect Auction Clearance Rates?

Back view of bidders raising their hands at a property auction. Auctioneer holding out gavel

Weekly clearance rate data does not make a trend, especially when that data is being affected by outside forces. When looking at auction clearance rates on a weekly basis, keep the following in mind:

  • Weekly clearance rate data can be delayed, meaning clearance rate results may not be accurate
  • Properties that are withdrawn from sale are sometimes erroneously counted in the clearance rate data
  • Sometimes, clearance rate data also includes properties that are sold before or after the auction, which muddies the water and inflates the data.
  • A range of other factors may also be at play, from interest rates to the number of competing auctions running simultaneously. Weather, major sporting events, and holidays can also impact auction clearance rates.

Other Limitations and Additional Auction Data to Consider 

  • The Melbourne Effect: Melbourne is known as the auction capital of Australia – and even the world. Outside capital cities and major centres like Melbourne and Sydney, the low levels of property auctions mean that Auction Clearance Rates are less statistically significant.
  • Property Type: When looking at clearance data, you also need to consider the types of property that are being auctioned. If it’s mainly inner city houses, house prices may be higher independent of clearance rates. If it’s mainly luxury properties, the clearance rates may be lower because luxury properties have fewer potential buyers and can be harder to sell.
  • Definitions and Reporting: As discussed above, the exact definition of a property that sells at auction will vary across the real estate industry, and some agents will be selective or late with the data they provide. This can impact the reliability of Auction Clearance Rate data.

Alongside Auction Clearance Rate data, some additional metrics to consider include:

  • Average days on market for properties sold at auction
  • Number of properties sold prior to auction (as a percentage)
  • How many auctions started with a vendor bid
  • The average number of active bidders per auction
  • Number of properties sold above reserve

Overwhelmingly, Prices Grow Most When Auction Clearance Rates Are High

Auction clearance rates aren’t the be-all and end-all, but the data is clear.

When house prices are rising more than usual, auction clearance rates are typically above average. Conversely, when prices are rising less than usual, auction clearance rates tend to be lower than average.

And it’s not just in Brunswick either. Across Melbourne, auction clearance rates have consistently been in the high 70s, and when they are higher than the same point in previous years, we see strong buyer demand from multiple bidders at auction. We’re yet to see a turn in that trend, but as the above analyses prove, it’s important to keep monitoring.

Alongside other data points, auction clearance rates can also give you insights into:

  • The current state of the property market.
  • The current state of the job market.
  • General consumer confidence.
  • The best times to buy or sell.
  • Whether you should buy/sell or hold.
  • The current lending behaviours of the big banks (availability of credit).
  • And more!

Understanding Auction Clearance Rates can help you get on the front foot with emerging trends. Whether you need a buyers advocate in Kew East or buyers agents in Templestowe Lower, Property Analytics can crunch all the numbers to help you make high-value investment decisions.

If you’re ready to develop or invest in real estate, have a chat with Andrew Stone from Property Analytics – your local property investment advisor in Melbourne.

Model house on top of a large pile of gold coins

Tips for Successful Real Estate Investing in 2023

Tips for Successful Real Estate Investing in 2023 1000 667 Andrew Stone
Model house on top of a large pile of gold coins

In my 2023 Melbourne Property Market Forecast, I told you what to expect from real estate in 2023. And in my property market trends piece, I identified the key trends that will define the market and what they mean for investors.

Now I’m here to share my tips for investing in real estate in 2023. Some of these tips will reinforce real estate investing fundamentals and others will be specific to what I see happening in this year’s market. But all of these tips are based on my years of experience as a Melbourne buyers advocate, property investment advisor, and real estate analyst, as well as the historical and emerging data that I use to make investment decisions every day.

My name is Andrew Stone from Property Analytics, and here are 10 tips for successful real estate investing in 2023.

1. Understand What Kind of Property Market You’re Walking into in 2023

Successful investors walk into each situation with their eyes wide open, and the 2023 Melbourne real estate market should be no different.

The property market has been incredibly disruptive and unstable for the last 2-3 years, with significant price rises in 2020-21 followed by a historic property price downturn in 2022.

Many experts are promising nothing but doom and gloom in 2023, and while certain changes will be a harsh reality, there are opportunities for investors.

The Melbourne property market in 2023 will be marked by:

  • Lower property prices – including further drops in the rolling 12-month median property price
  • Further interest rate increases
  • Inflating construction costs and further development delays

But this year’s market will also bring:

  • Greater stability in the property market compared to the massive swings we’ve seen in recent years
  • Interest rates will likely stabilise after some rises in the first half of the year. And stable interest rates – no matter the level they stabilise at – is a good sign for house prices
  • Strong demand in buying and rental markets. Expect increased rental demand for townhouses and apartments, and growing buyer demand for turnkey-ready houses and high-yield apartments
  • More investment-grade properties coming on the market – both unfinished developments and quality dwellings
  • Signs of a strong future for Melbourne’s property market, including returns to pre-pandemic migration levels and strong population growth.

See my property market forecast and emerging trends analysis for more information about the 2023 market. 

To summarise, there are many opportunities for real estate investing this year, both for first-time investors and those looking to bolster and diversify their portfolios.

Additionally, many Australians have three times more savings than they did at the start of the pandemic. If this applies to you, now could be the perfect time to act.

2. Audit Your Real Estate Investment Performance for the Last 12 Months

Now that you understand the market, it’s time to understand what you did right – and wrong – in the last 12 months. Consider all the investment opportunities that were open to you in 2022 and the property decisions that you made (or didn’t make).

Where were you successful in 2022 and what situations could have gone better for you?

When reviewing your performance, it’s important not to write off missteps completely or blindly replicate what has worked in the past.

As I just explained, the property market is changing. Your decisions to buy and flip property may have seemed sound when the market climbed by 30% during 2020 and 2021. But you would need to be much more discerning if you made the same decision now.

Similarly, your decision not to make an investment move in 2022 may have proved wise, but inaction in 2023 could be costly. If you’re ready to act, talk to a buyers advocate in Preston or Kew East about the best areas and properties to invest in. Consider making a move now before the market settles and prices start to rise.

3. Recommit or Renew Your Investment Goals for the Coming Year

Telling a real estate investor to set clear goals is investing 101, so I won’t labour the point. But I will tell you to set your goals based on the previous two points – what the market is doing now and what position you find yourself in after the last 12 months of investing.

Essentially, all investors should actively review their investment goals in line with the state of the market and their previous performance, rather than blindly recommitting.

Do you need to generate more passive income? There are opportunities in the 2023 market to secure rental properties that promise steady rental income and strong returns. It might be wise to secure this type of property to stimulate cash flow if you’re investing for the first time, or if you need to diversify your portfolio and alleviate your current debt position.

If you’re doing a bit of damage control, your goal might be to release some debt by selling off assets. If you have purchased properties with strong fundamentals, do what you can to actively add value to your investments before selling in 2023.

I will always tell my clients to keep one eye on long-term capital growth, as this is where you will see the greatest potential for massive wealth generation. Look for properties with a strong land-to-asset ratio that can be developed or renovated to add value. Make sure you pinpoint the perfect areas to buy, looking at factors like proximity to hospitals, universities, and other high-income-producing activity centres. Consider also the huge impact that favourable school zones can have on the future capital growth of real estate, but keep in mind that school catchment areas can and have been rezoned in the past.

4. Research Local Markets Like the Back of Your Hand

The idea of the “Melbourne Property Market” is a bit nebulous. Yes, there are trends and data points to paint a picture of what’s happening across the city, but it’s more important to understand what’s happening on a hyperlocal level.

This year, it will be more critical than ever to look at where your investment properties are located – or where you’re looking to invest – and understand what THAT market is doing.

Things like median house price, median unit price, average rental return and overall demand for housing can swing significantly between outer suburbs and inner suburbs, capital cities and regional towns. Sometimes, whether or not you’re in an attractive suburb, a buyer’s market, or a seller’s market can shift from one postcode to the next.

The deeper your knowledge about local markets, the more successful you can be in 2023.

5. Build Your Professional Network

Man touching a model house on a touchscreen that connects to many different contact points

But how do you build your market knowledge on such a specific, local level? You’re already a busy professional – you might have the means and funds to invest, but you don’t have the time or desire to make it your job.

If you’re stepping into the market in 2023 or you’ve been going it alone in the past, make this the year you build your real estate contacts.

Yes, real estate agents will bug you until your phone explodes. But the more specific information you give them and the better you get to know them, the more likely it is that they will point you towards your next investment opportunity. Just don’t take anything they say as Gospel Truth. They are the seller’s agent after all. 

You can also partner with a buyer’s agent if you’re looking to find a strong investment property or development site. These professionals can do everything from shortlisting properties that match your real estate strategy to helping you negotiate the sale.

The great thing about finding a good buyer’s agent is that they can be the connective tissue between all the other real estate contacts you need – from estate agents to town planners!

I know this because I am a buyer’s agent, and Property Analytics focuses on finding properties specifically for investment and development purposes.

6. Explore Off-Market Opportunities This Year

In 2023, an influx of quality dwellings and development sites will hit the market due to a combination of factors.

Many fixed rates will expire and revert to a much higher rate than investors and owner-occupiers expected. The result is overleveraged and overburdened property owners who will need to sell – many of whom can be considered distressed vendors.

At the same time, many developers have become heavily leveraged both due to changing economic circumstances and the ongoing delays and price hikes in the construction industry. These development projects remain profitable but may not be financially viable for the current owner.

All of this means there are opportunities and bargains to be had in 2023. Secure a middle-ring or inner-city development site, or find a quality investment property that’s ready to rent and appreciate.

To leverage the best available deals, you will need to look at off-market opportunities. Many homeowners, investors, and developers will be looking to unburden their debt quickly and quietly, which means they may want to avoid a full sales campaign wherever possible.

Proactively pursuing off-market sales will help you find and secure the best of these opportunities. You can find off-market deals by partnering with a well-connected buyers advocate in Brunswick, Northcote, and across Melbourne, or by searching for off-market opportunities yourself.

7. Become an Expert Negotiator

In good news for real estate investors, rental income is expected to climb in 2023. This means your source of passive cash flow will be in a strong position if you have made wise rental property investments. Similarly, if you’re looking to enter the market this year, higher rental yield could soften the impact of increasing interest rates. 

On the other side of the coin, the combination of increased rental prices and softening property prices is likely to result in more competition for those who are looking to buy.

Would-be buyers and first-home buyers will see 2023 as the perfect time to ditch the weekly rent and finally enter the housing market as an owner.

As an investor, you’re going to need to master the art of closing the deal to outcompete both owner-occupiers and fellow real estate investors.

This means being able to execute auction bidding strategies and knowing what sort of moves to make during private sales, pre-auction offers, or when a property is passed in.

Vendors understand that rising interest rates, falling property prices, and shaky consumer confidence mean fever-pitch auctions won’t be as reliable as they have been in the past few years. But this just means that vendors and their selling agents will be savvier when handling private offers and negotiations. 

So you need to be savvy too!

Either sharpen your own skillset around bidding, private offers, and negotiations or hire a Melbourne buyers advocate to help secure the assets you need for successful investing in 2023 and beyond.

8. Go Green with Your Development Projects

The trend of sustainability in residential developments is set to stay, so if you’re pursuing development projects in 2023, keep eco-friendly considerations in mind.

Going green with your development projects offers excellent resale value, as future buyers and investors are increasingly looking for features like solar, heat pump heating and cooling, and all-electric homes.

Rebates may also be available when retrofitting homes with energy-efficient appliances and features. This could be an easy way to increase your capital gains and ROI, with the government subsidising the cost of your value add!

9. Value Adding Is a Strong Option in 2023

Renovation Concept: Before and After Apartment Refurbishment

For those who are considering selling or leveraging equity, it is important to stimulate strong capital growth in 2023, and this requires an active approach.

The best way to do this is to make your investment better through either renovation or development.

While the construction sector is hurting, there will be some cost stabilisation in 2023, meaning there are many steps you can take to renovate your property and increase the value of your investment. 

Boost first impressions by rendering and re-working front yard space, creating usable outdoor entertainment areas, and renovating wet areas like kitchens, bathrooms, and laundries. The simple act of ripping up carpet and polishing natural floorboards could be all you need to add value to your investment. 

In a property market that’s trending a bit flatter, now is the time to make these smart improvements.

10. Renovated and New Properties Are Safe as Houses

The current property market is one where you need to understand and respect the fundamentals.

As I said in my 2023 Forecast, you can still expect strong results from new and renovated properties. Conventional blocks, future potential for development and renovation, and residential properties in high-demand areas will also serve you well.

But if you’re targeting oversupplied apartment projects or “character homes” with limited appeal, the market will be less forgiving to you now than ever before.

You should see 2023 as a window of opportunity – especially in the first half of the year while the situation is yet to settle.

Yes, you will still need to pay handsomely for quality homes and rental properties that offer strong yields for investors. But the current state of the market means you might just secure these quality investments for somewhat more affordable property prices.

Most importantly, the right properties will repay you by continuing to pay handsomely in the years to come – both through annual income from rent and long-term capital growth. And you can expect a slight bump in house price growth as soon as interest rates stabilise.

So, it just makes financial sense to get in now. Secure property with good fundamentals and great growth potential while dwelling values remain flat!

Learn more about Property Analytics

My name is Andrew Stone, founder of Property Analytics. Together with my team, I can help you navigate the property market with confidence in 2023.

As buyers advocates, investment advisors, and development consultants in Melbourne, Property Analytics offers an end-to-end buying service. We can shortlist, negotiate, and secure investment properties, and help you put profitable property development plans in place.

To discuss successful real estate investing in 2023, simply pick up the phone. Let’s have a coffee and a chat, and see what your next move might be.

2023 blocks next to model house: Property Forecast

Property Market Trends Investors Should Pay Attention to in 2023

Property Market Trends Investors Should Pay Attention to in 2023 1000 606 Andrew Stone

In my recent Melbourne Property Market Forecast for Investors, I explained the state of play for local real estate in 2023. Essentially, I explained that there will be plenty of opportunities for investors in 2023, and despite what it may look like now, the next 12 months will bring increased stability to the market.

But that’s not all I have to say about the year to come. 

As a buyers advocate in areas like Brunswick, a property development consultant, and a property investment advisor in Melbourne, I can see a few significant trends that will shape the market. All of this is supported by the proprietary data – both historical and emerging – that I have gathered over the past decade as a real estate analyst.

Here are the trends that all property investors should pay attention to in 2023.

Seasoned Investors Will Come Back to the Market This Year

My 2023 Property Market Forecast didn’t always make for fun reading.

I explained that median house prices are dropping, interest rates are rising, and the construction sector has seen better days.

So, why would investors return to the Melbourne housing market in 2023?

To that I say, “just watch them”. 

And my reasoning can be summarised in a quote from 19th-century British Financier, Nathan Rothschild.

Rothschild advised us that “the time to buy is when there’s blood in the streets”, and while that’s a bit violent for my liking, he has a point that applies to the Melbourne property market in 2023.

Here are the signs of “blood on the streets” that will bring seasoned investors back to the housing market.

The End of Fixed Rates

The majority of remaining fixed interest rate loans in the 2-3% range will expire in 2023. These mortgages will roll over to 5-6% variable rates due to all the recent rate hikes, resulting in many overleveraged investors and homeowners.

Most of these mortgage holders will have no option but to sell – and they will be highly motivated to do so.

Distressed vendors in an already flat property market are like music to an investor’s ears. The most experienced real estate investors will understand that this situation is too good not to capitalise on.

This may sound harsh, and in a way, it is a harsh reality of the property market. But for inexperienced investors or overwhelmed homeowners who find themselves needing to sell, being able to offload their debt to a well-prepared investor is also their ticket out of a tricky situation.

The Reality of Unfinished Development Projects

In 2020-21, the construction sector was booming and buyers with development aspirations were snapping up properties.

But the problem for these investors is that the construction boom ended, with prices and delays skyrocketing in 2022. 

Fast forward to today and many of these developments have plans and permits but are no longer commercially viable due to increased construction costs and lower property values.

Similar to rising interest rates, these complications have resulted in inexperienced developers being caught out. Without adequate cash flow or savings, these rookie developers will be forced to sell to more experienced investors and developers.

Seasoned property market veterans know just how valuable development projects can be when they already have plans and permits. Profits might be tighter, but these projects are generally lower risk and can go to market sooner, making them a great quick win for developers.

This is one of the many property development strategies we pursue at Property Analytics, and you can be sure that many other investors and developers will do the same in 2023.

The RBA Will Be The Starting Signal for Experienced Investors

Seasoned investors might be circling in the pit lane at the moment, but they will look to the Reserve Bank of Australia for the perfect time to act.

Interest rates may be going up now, but when the RBA suggests that rate rises are likely to cease, this will signify the beginning of a new market cycle. Property prices will then stabilise, but they won’t necessarily increase… yet.

This change in market conditions will be an inevitability, and the savviest investors will either wait for the RBA signal to act or they will try to pre-empt the announcement to take advantage of the market just before it stabilises and consumer spending increases.

Essentially, smart investors will be listening to the RBA about interest rates, and you should be listening too!

So, in summary, the end of fixed-rate loans, the reality of unfinished development projects, and the inevitability of flattening interest rates will mean more investors on the market, which could result in greater competition for you in 2023.

Rental Yields will Continue to Rise in 2023

"For Lease" sign Melbourne

If you’re an investor looking to generate rental yield, 2023 could be a great year for you.

Of course, you will need to have your fundamentals in order – the right property type in the right location for success.

But if you’ve laid the groundwork, you can expect a fruitful rental market, especially in the middle and inner suburbs of Melbourne.

Once again, I’ve come up with a few reasons why this will be a trend in 2023.

A Return to Immigration

Overseas migration to Australia increased 171% in 2021-22 compared to the previous year (for obvious reasons). This trend will continue in 2023, with immigration numbers returning to normal and an increased focus on skilled migrants and students.

On top of this, internal migration to Victoria will continue, with Melbourne set to become the country’s largest capital city by 2032.

An increase of skilled workers in high-wage growth industries will result in climbing demand for quality rentals, and therefore, increases in rental yield.

The Impact of Diminished New Build Homes

The residential construction sector is struggling, and while we can expect some recovery, this will still have an impact across real estate markets.

One change that will hit Melbourne’s real estate sector is a lack of new builds in 2023. This will lead to a supply/demand imbalance, particularly towards the end of the year, which could be good news for your investment property.

If you own a newer turnkey home, this will achieve surprising price results due to the lower supply levels of new builds to compete with it. As well as higher rental yields, you can expect better results if you choose to sell these types of properties in 2023.

The Trend Towards Less Efficient Planning Departments

Another trend to take note of in Melbourne and other capital cities across the Australian Property Market is the trend towards less efficient council planning departments.

Local councils have become increasingly bureaucratic in recent times, and I foresee this trend continuing in 2023 and beyond. This means dragged-out approval processes for development projects and other capital improvements.

Active value-adding can accelerate the rate of growth of your property, and development is the ultimate way to increase dwelling values. Unfortunately, developers will need greater patience, extra cash flow, and plenty of persistence to weather the many delays thrown at them by local councils.

This lack of efficiency will scare off many smaller developers, so if you have the means to pursue development projects in 2023, you could capitalise where other would-be developers fail.

Just be prepared to rip your hair out dealing with the local council.

Expect an Increase in Off-Market Transactions

The auction market has lost some of its lustre and cost-conscious sellers will be looking for easy and affordable ways to offload their housing stock in 2023. 

With changes in buyer demand and flagging median house prices, vendors will be looking for ways to sell in the Victorian capital. Many of these vendors will look at off-market avenues, so as a potential buyer, you need to keep your eyes open to the entire market.

If you need help finding off-market properties for sale in Melbourne, consider partnering with a buyers advocate in Northcote, Kew East, or near you.

Construction Costs Will Stabilise in 2023

Two architects reviewing plans in an office

The construction industry has had a turbulent 12 months, with material and labour shortages resulting in skyrocketing costs and significant delays.

The lack of new build homes and abandoned development projects mentioned in this article are just a few of the consequences that have been seen in the Victorian capital and across the wider property market.

In 2023, you can expect somewhat of a “Return to Normalcy Scenario” for the construction industry. Labour forces will normalise – in part due to the return of skilled migrant workers – and access to materials and supplies will also improve.

This is good news for investors looking to pursue development projects. While it may not all be smooth sailing, this stabilisation in the construction sector will serve you well when developing or pursuing other value-adding real estate activities.

Talk to a Real Estate Industry Expert

The real estate analysis services available through Property Analytics are designed to explain the property market to buyers, sellers, and landlords. If you’re looking to make a move in the 2023 property market, my team and I can help you shortlist and secure a high-growth investment property as your buyers agents in MelbourneI can also provide high-level property investment and development advice that helps you achieve your real estate goals.

My name is Andrew Stone, and the best way to learn about Property Analytics and how I can help you is to give me a call and have a chat. Reach out for a one-on-one consultation and to discuss your 2023 development and investment goals.

Aerial Photo Of Houses In Suburban Melbourne, Australia

2023 Melbourne Property Market Forecast for Investors

2023 Melbourne Property Market Forecast for Investors 1000 666 Andrew Stone

Melbourne house prices will continue to fall and interest rates will remain on the rise, but market stability is just over the horizon.

This is the 2023 Melbourne Property Market Forecast for Investors, brought to you by Andrew Stone of Property Analytics – your property investment advisor in Melbourne.

Aerial Photo Of Houses In Suburban Melbourne, Australia

Here’s the Headline: Melbourne House Prices Will Continue to Fall!

If you’re looking for a reprieve from all the negative news stories about the state of the Australian Property Market, you should look elsewhere.

Journalists will continue reporting about falling dwelling values because the rolling 12-month median house price will continue to fall. 

In fact, I guarantee it. 

How can I be so confident? Well, the monthly median house price was significantly lower than the rolling 12-month median house price for most of 2022.

Because of the way these two sets of data are measured, there is always a lag between monthly median house prices and rolling 12-month house prices.

Or in other words, the lower monthly numbers will start to affect the higher 12-month rolling price, meaning there’s only one direction it can go – down!

And some news outlets will probably report a statistical inevitability like it’s a sign of the next big property market crash.

More Rate Hikes Are Almost an Inevitability

Homeowners and investors should brace for more interest rate rises because further increases in the official cash rate are likely.

And until we see those interest rates stabilise, you should not expect a return to consistent price growth. Increasing interest rates result in reduced borrowing power and weary buyers, which in turn means less demand for housing and a lower price for houses and other properties.

With the Melbourne market well and truly coming off the boil, many vendors are being brought back to reality in a big way. If your property lacks one or more of the fundamentals – like a quality dwelling, conventional block or sought-after location – you can expect much less competition between buyers and even less of an appetite to overpay to secure a property.

But here’s the good news. The idea that interest rates need to return to the extreme low points of the pandemic – or even the modest levels we saw before that – is not supported by data.

History suggests that it’s the direction that interest rates are moving in – and not the cash rate itself – that drives property prices.

Or in other words, interest rates might stabilise at a figure that’s higher than we’re used to in recent years. But as long as they stabilise, you can expect to see a steady return to price growth in the housing market in Melbourne and other capital cities. 

Melbourne’s Rollercoaster Real Estate Market Might Be at an End 

It’s fair to say that it’s been a very tumultuous 5 years on the housing market for property investors and owner occupiers alike. We’ve jumped back and forth between buyer’s markets and seller’s markets fast enough to give you whiplash, and property values have had steep inclines followed by the sharpest rates of decline we’ve ever seen.

Between late 2017 and late 2019, property prices fell by about 10%, which represented the sharpest fall in property values in living memory. Then through 2020 and 2021, we saw prices jump about 30% as interest rates plummeted and buyer demand soared. Then throughout 2022, prices fell by about 15% – beating the previously historic fall from 2017-19.

We’re due for some stability in Australian house prices and the general state of the housing market, and in 2023, we’re likely to get it. Expect to see much more consistency and less volatility across the 2023 calendar year.

Some Rental Markets Will Continue to Strengthen in 2023

Townhouses in Melbourne, Australia

Apartments and townhouses have experienced a decline in vacancy rates and a rise in rental yields, and this trend will continue in 2023. This will largely be driven by the increase in overseas migration as immigration levels in Melbourne and across Australia return to normal in a post-pandemic world.

This decline in vacancy rates and increase in rental yield presents an opportunity for investors who have recently completed townhouse projects or have retained their assets over the last few tumultuous years.

The Construction Boom Is Over

Government programs aimed to boost construction and renovation activity and strengthen the economy during the pandemic, but those times are well and truly at an end.

New construction work was already on the decrease in the Melbourne and Australian property markets, and these decreases will continue in 2023. A combination of lower end prices and higher construction costs has created serious profitability issues in the construction industry, and this has resulted in turmoil across the board.

News of more than a dozen construction firms going under first emerged in mid-2022, and the uncertainty and unprofitability across the sector continue to cause shockwaves.

Expect Auctions to Start Looking Different 

Sign for residential real estate auction

We’ve seen the auction market take all shapes and forms, from online sales to bidding at 2 feet apart. As a buyers advocate serving Preston, Northcote, and Melbourne’s hottest suburbs, I’ve seen it all.

But throughout it all, auctions have consistently remained two things; hot competition and the preferred way of selling.

I don’t expect private sales to surpass auction campaigns in terms of numbers, but auctions will increasingly feel like private sale campaigns with an end date attached. The majority of properties will transact with less buyer competition in 2023, with 5 or more serious buyers dropping back to 1 or 2 in many cases.

For this reason, you won’t find as many buyers stubbornly deflecting private offers and holding out for auction day. Investors and homebuyers will have the opportunity to make genuine offers and negotiate a deal before the day of the auction. When properties do get to auction, we can expect steady auction clearance rates overall in 2023 based on their current levels.

Supply: More Properties Are About to Hit the Market

It’s always worth looking at how supply and demand dynamics are expected to play out because of the impact they can have on market conditions. 

Throughout the year, you can expect to see an increasing supply of properties coming onto the market. This is due to the large proportion of fixed-interest loans that will be reverting to variable rates, and the many mortgage holders who were never really prepared for this switch. With many loans going from 3% interest to 5.5% – or experiencing an even larger swing – many vendors will be looking to offload and unburden, some of whom will be distressed vendors.

For strategic investors and buyers, the sheer volume of real estate hitting the market could represent an excellent opportunity for affordable property purchases and strong long-term gains.

Demand: High Yield Apartments Plus Turnkey Houses

In 2023, expect buyer demand and interest to turn towards higher yield apartments whose values have held up reasonably well in recent times. Investors will look to these rental properties to generate passive income and meet the renewed rental demand that comes partially from the returning influx of overseas migrants.

A-Grade homes will continue to attract buyers. But with building approvals dropping, living costs rising, and challenging times ahead for the construction sector, buyers are specifically searching for updated/newer houses that are turnkey-ready and can quickly be moved into. 

Potential buyers will always consider long-term renovation and development work – especially as part of an investor’s value-add. But for investors and owner-occupiers, the priority will be on houses that are ready to use now, both in Melbourne and other major cities.

Here’s the Takeaway: There Are Opportunities for Investors in the 2023 Melbourne Market

Time To Invest In Real Estate Concept

To summarise, I expect the cash rate to continue rising before it stabilises, and the median price of properties will continue to fall, resulting in lower house values.

What this represents is a long-term opportunity for those who choose to invest in A-grade houses and properties.

If you continue to get the fundamentals right, you can enter the property market before rate increases hit their peak and begin to tail off again. This means you can enter the market before interest rates stabilise, prices begin to climb, and buyer confidence recovers.

In other words, you can get in before the wearier buyers and investors make their move, and you’re not likely to be punished by months and months of rate hikes.

As always, some of the things to look for in your investment property in 2023 include:

  • Properties with a high land-to-asset ratio
  • Conventional blocks in popular locations (such as inner-ring suburbs)
  • Turnkey properties that are ready to move into now
  • Properties with strong future development potential
  • Properties in areas with low unemployment rates, high wages, and steady wage growth
  • Now is not the time to target lower-quality properties or property types where there is a glut of supply!

Now Might Be the Perfect Time to Enter the Melbourne Property Market Because:

  • Melbourne will continue to experience strong population growth. Despite talk of interstate migration post-covid, Melbourne reached a population of 5 million 11 years earlier than projected and is set to overtake Sydney by 2032. Over 70% of people living in Victoria reside in Melbourne, and as the population continues to grow, demand for housing will grow too!
  • Melbourne’s economy and lifestyle are also highly attractive for well-paid overseas migrants. Migration levels are already experiencing a strong rate of growth post-restrictions, and the process will continue to attract many more skilled migrants to Melbourne – resulting in many more renters and buyers!
  • Melbourne’s popular school zones will continue to drive up property prices. If you can get a great deal on an investment property in an in-demand school zone, you can expect to see property price growth and strong rental appeal as parents jockey to establish their families in a preferred catchment area.
  • Melbourne’s property market will start to settle in 2023. So, if you are financially capable and considering joining the investment market, now is the time. Make your move before interest rates stabilise and Melbourne’s dwelling prices start creeping back up. There are still investment-grade properties available across the market, and acting promptly and prudently can help you get in on the ground floor and experience steady house price growth in the years to come.

Talk to a Property Expert

Property Analytics specialises in helping clients secure high-growth investments and development sites in Melbourne.

Our buyers advocates serve areas including Kew East, Kew, and Brunswick, offering an end-to-end buying service that leverages industry-leading market research and years of practical industry experience.

From strategy and shortlisting to price negotiations and final handover, my team and I can research, locate, and secure profitable investments that meet your goals.

The only property price forecast that matters is the one that tells you how your target investment will perform. To invest in properties with strong demand and high capital growth potential in 2023 and beyond, arrange a one-on-one consultation with Property Analytics today.

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