The Melbourne market is still on fire, though affordability is likely to quench growth as the year progresses.
Property values have grown a whopping 21.87% across Melbourne in the twelve months to January 2008, reports Residex, and the market shows no signs of slowing down any time soon.
While 2007 was the year that the fuse was lit beneath Melbourne’s booming residential housing market, 2008 should see capital growth action shift to the units and apartments, says Andrew Donnelly, CEO of property research group Braxton Chase.
“We expect many of the star property performers to be in the middle ring suburbs where infrastructure, affordability, and character will intertwine to deliver capital growth fruits,” Donnelly says.
“As affordability becomes more and more stretched, we expect to see the market in the southeast pickup where growth has been much more subdued over the past year. Driving this growth is the creation of a new industrial corridor throughout the region, the completion of EastLink Motorway, tremendous job creation, and a continuing population influx.”
However, as Melbourne’s population continues to expand, limited supply pressures – particularly for high-density, inner city living – will remain an issue throughout 2008.
Several hi-rise projects are currently at the early stages of construction through the CBD, Southbank and St Kilda Road precincts, however, completion of the majority of these developments is not due until 2009.
Property research group Herron Todd White forecast a continuation of the tightening rental market throughout Melbourne for the foreseeable future as a result.
Herron Todd White also predicts that the completion of the “EastLink” Motorway – the 39km road system linking the outer eastern and south eastern suburbs with Melbourne’s existing freeway and tollway network – could “substantially” benefit suburbs located in these regions.
“An estimated 40% of Melbournians live in the EastLink corridor. Benefits will include reduced travel time to the CBD and airport, as well as easing congestion on overloaded arterial roads such as Springvale Road and Stud Road,” the report says.
“The residential property market benefits could be substantial throughout the suburbs of this region. Firstly, we could see considerable increase in demand and capital values in areas such as Frankston, one of Melbourne’s most affordable suburbs located by the bay at the end of the new tollway. With improved access coupled with an affordable median house price and desirable bayside locality, areas such as Frankston could see some major movement in 2008.”