Property prices are showing no signs of hitting the brakes as investors and homebuyers dive into the Victorian city. Investors have swooped into the Melbourne property market, pushing property prices to nearly double digit growth in the September quarter, according to the latest Residex report.
House prices surged by 9.12% to $439,000 whilst units jumped by 8.57% as buyers snapped up properties in Melbourne's inner and middle ring suburbs. The affluent suburb of Kew notched the highest number of house sales for the three months ending September. Huge demand pushed median house prices by 10% to $1.12m. Over the last 12 months, capital growth climbed by about 19%.
Apartments in South Yarra and St Kilda were the most wanted, with each suburb racking up around 9% capital growth in the same period. Investors saw rental rates go up by more than 4% amidst shrinking rental supply.
Herron Todd White noted in its report that whilst demand for quality housing in the inner ring suburbs are strong, there is a lack of quality housing stock hitting the market. “Once a suitable property is in the market, prospective purchasers, many having been searching the market for months, will pay premium prices to secure their property,” it said.
Rental vacancies for inner Melbourne suburbs are currently at a 25-year low of 1.8% which has led to significant increases in rents. Over the 12 months ending September, rents for house surged by 26.92% and units by a similar margin.
The limited supply and strong demand is also having similar ripple effect as renters are pushed out from the inner city, the valuer says. “We are seeing a cultural shift in the way people reside in the inner city. There is the move away from traditional forms of housing into low maintenance, high density apartment living,” it says.