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Melbourne Property: CBD or Fringe

Melbourne to overtake Sydney as largest city in 2053. Source: Australia Bureau of Statistics

MELBOURNE PROPERTY: CBD VS FRINGE

Among all the states in Australia, statistics show that Victoria will have the largest population in the future, driven by massive and rapid growth in Melbourne city (source: CBRE). The Australia Bureau of Statistics projects that Melbourne will overtake Sydney as Australia’s biggest city in 2053.

It’s easy to understand why – spurred by a highly diversified economy and world-class education and tourism, Melbourne has been named Most Liveable City five times consecutively since 2011.

Smart investors looking to net significant rental income from the growing population have been investing their money in various suburbs across this beautiful city.

The key question is, where is the best place to invest in Melbourne?

MELBOURNE CBD: SMART INVESTORS STAY AWAY

Melbourne CBD is an amazing place – organized, pretty, artistic and with amazing walkability scores – and we love it! From an investment point of view, however, property in the CBD is an absolute NO.

Here’s why:

  1. Valuation for property in the CBD has been 20%++ BELOW purchase price

In the CBD, housing projects are confined to high-rise development only, which usually takes about four to five years to complete. The team at CSI Prop has heard from many of those who had previously invested in CBD property, complaints that the banks had undervalued their property by 20% lower (or more) than purchase price. Statistics have shown that the average property price in Melbourne increases by 9.53% each year (source: Australia Property Monitors). This essentially means that the abovementioned properties in the CBD had not only been valuated BELOW its original purchase price, it had also depreciated! Speak to a licensed independent mortgage broker or lawyer for Australian property if you want verification.

  1. The last three years have seen NEGATIVE capital appreciation in CBD property (source: Australian Property Monitors).
  2. The CBD is approaching an oversupply of apartments. There is increasingly higher vacancies as more properties come to completion.

Melbourne CBD approvals for six months of 2015 was 12,516. Melbourne’s high-rise boom currently encompasses 33 towers under construction and a further 39 to be built, according to Skyscraper, Activity Monitor and UrbanMelbourne. Researcher BIS Shrapnel said, “The city is already heading for a glut of apartments. By June 2016, there will be a surplus of 15,000.”

  1. No Exit for the next 10 Years++

Last September, Australian website Domain.com published that investors should “get out as soon as possible (otherwise) it will take 10 to 15 years before you get your money back.” This is due to (i) the oversupply of apartments in the CBD and (ii) Australians generally dislike living in the CBD. In case you didn’t already know, foreigners are not allowed to purchase property in the secondary market. Which simply means that foreign investors looking to exit the market are only allowed to sell to Australians. But Australians don’t like living in the CBD…

 

CBD FRINGE PROPERTY – HIGH RETURNS, GREATER CAPITAL APPRECIATION

Research has shown that investing in property located at the CBD fringe is the most rewarding. We at CSI Prop are supporters of properties located in these locations, based on our own research which is backed by industry experts.

Property located in the CBD fringe are a top choice because:

  1. They are extremely accessible to the city by all kinds of transport including walking, yet removed enough from its hustle and bustle.
  2. Many are located close to areas with lots of green, F&B outlets, entertainment and the arts.
  3. Good appreciation value. If you invest in the right location, you should be able to own seven properties in 10 years, with an initial capital of only RM100,000. Ask us how.

We leave you with a chart of the top CBD-fringe suburbs to invest in:

Melbourne-Fringe-VS-CBD-csiprop
Comparative data of property located at Melbourne CBD-fringe

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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Melbourne Suburbs to Watch in 2016

Melbourne Suburbs

If you’re watching the Melbourne suburbs market following our last posting on the Australia Outlook for 2016, here are some tips to give you a heads-up on what Melbourne suburbs to look out for in this city this year.

To recap, Melbourne did pretty well last year, ending 2015 on a high auction note compared to other cities in Australia. However, median house prices growth is expected to moderate this year, yet the increasing population and relatively low interest rates will continue to fuel interest in the property market in Melbourne.

Real Estate Institute Victoria (REIV) expects moderate growth across the city in 2016, with further price increases in a range of suburbs in Melbourne’s inner, middle and outer rings.

Based on research by the REIV, here are the suburbs to look out for:

West of CBD

  1. Footscray
  2. Altona
  3. Sunshine
  4. Spotswood

North of CBD 

  1. Preston
  2. Epping

East of CBD

  1.  Burwood East
  2. Montrose
  3. Mount Waverley
  4. Glen Waverley

South of CBD

  1.  Seaford
  2. Chelsea

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CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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Outlook 2016: AUSTRALIA

TALK is rife that the Australian property market is poised to slow down and prices are set to slump, attributed to an ongoing market correction in Perth and Darwin, and the APRA actions of restricting credit growth.

As usual, this has sparked a debate among the experts. Some say that Australia’s housing price boom has hit its peak, and there could be an impending recession. Other industry insiders say that a price correction is part of the cycle. Macquarie predicted a dip in house prices of as much as 7.5% by March 2016 – a figure that some experts have dismissed.

Naturally, this has sparked concern among investors and home buyers on how major Australian cities like Melbourne, Sydney and Perth will be affected.

Louis Christopher, managing director of independent property research company SQM Research, forecasts that the national housing market will slow down in 2016 predominantly as a result of a slowing Sydney housing market, but that the market will not record a fall in prices for the year.

Perth and Darwin are reported to experience the largest falls in rents, but this is just part of an ongoing trend currently being recorded in the two cities, says Christopher.

All said and done, there’s no need for hysterics or dramatics. “I don’t think there is any immediate danger of a significant fall in house prices – 7.5% is remarkably precise and you’re brave to be that precise in forecasts about the housing market,” says Saul Eslake, a leading Australian economist, arguing that even though house prices might be overvalued, did not mean they’d fall in the same way as stocks.

Melbourne to Outshine Sydney!

It certainly isn’t all doom and gloom. In spite of the bleak news, SQM’s 2016 Housing Boom and Bust Report forecasts that average capital city dwelling prices will rise between 3% and 7% next year (the last 12 months up to June 2015 posted a 9.8% rise).

So, yes, the fact is that there has been a moderation in Australia’s housing market, but this is normal and part of the cycle that affects housing markets all over the world. Corrections are to be expected in markets that have boomed in recent years as part and parcel of rebalancing, i.e, markets which have experienced the most robust price growth and where conditions have been imbalanced.

Additionally, Melbourne is set to outshine Sydney on property price growth, with a rise in Melbourne residences predicted to between 8% and 13%. Rents in Hobart and Gold Coast are also set to increase.

And while Sydney has been in the media for its huge rate of capital growth, Melbourne has experienced five years of 15% plus annual growth since the year 2000.

The streets of Melbourne are always full of character

Melbourne : The Figures Don’t Lie

Having been ranked the World’s Most Liveable City for the 5th year, Melbourne is an interesting city to watch as the numbers and fundamentals seem to be in its favour. Let’s consider the facts:

  • With 100,000 people migrating to Melbourne each year, Australia Bureau of Statistics projections has Melbourne overtaking Sydney as Australia’s biggest city in 2056.
  • The current population of 4.35 million is anticipated to reach 7.7 million.
  • With an average of 2.6 people per household, 38,000 properties are needed per year to accommodate that growth.
  • In 2014 Melbourne’s recorded median housing price of A$630,000 registered more than a 16% annual growth figure, after negative growth of nearly 5% during the 2012 downturn.
  • To learn more about the growth boom in Melbourne, watch this special news documentary by 7 News. Hover and click on the link to watch the videos.

#DidYouKnow that 63% of Malaysians choose to migrate to Melbourne?

In conclusion, the facts speak for themselves. The threat of a massive oversupply in Melbourne may well be overstated, say some experts, given the fall of vacancy rates as population growth and housing formation have quickly absorbed new housing stock being completed.

There are still many affordable properties available in the inner north and south of the city. Melbourne’s most affordable 1-bedroom apartments are located in Carlton, Carnegie in the southeast, Elwood and St Kilda. Whilst in the city’s west, there is Footscray and Maribyrnong. In some parts of Melbourne, it is still possible to purchase a bungalow near a train station for $400K! While stocks last, of course 🙂

Ultimately, in the face of Melbourne’s impressive consistent capital growth patterns, it is wise to remember that it are certain suburbs, property types and varying categories of buyers that are driving this growth.

More Reading

  1. Melbourne Looks Set to Outshine Sydney on the Property Ladder
  2. Real Estate Industry Insiders Say Property Prices Look Set to Fall
  3. The Melbourne Market Will Continue to Perform for Investors This Year & Beyond if You know Where to Buy
  4. Maribyrnong the Next Melbourne Property Hotspot

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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Brunswick East: Transformed Property Landscape

Brunswick East is surrounded by hip and happening dining, entertainment and retail outlets.

PLENTY has changed for the Brunswick East neighbourhood. The suburb in Melbourne’s inner North has transformed into a gentrified area featuring some of the hippest and trendiest dining, entertainment and retail outlets in the city namely along the Fitzroy and Lygon Streets.

At its most basic, Brunswick East’s allure lies in its close proximity to Melbourne CBD. Australians, in general, prefer living out of the city – a segregation that draws a clear line between work and play, both geographically and psychologically. Conversely, Asian investors prefer to be at the heart of the action, but are compelled to invest in dwellings outside the city to accommodate the local rental market comprising mainly young Australians.

One can imagine how being only 3km – 4km from the city centre, with fantastic public transport accessibility, makes living in the Brunswick East locality extremely attractive.

Additionally, housing is bigger and comparatively more affordable to neighbouring North Fitzroy and Carlton.

Hot Market

Today, Brunswick East is known to be the most difficult suburb in Melbourne to buy a house, forcing local and international buyers and renters alike to look to apartments instead. Recent CoreLogic RP Data statistics show that median house prices have increased by 26.6% in the last 12 months as a result. In the year ending Nov 30, only 2.1% of houses in Brunswick East had been listed for sale – well below the Melbourne average of 5.3%.

Built in 1910, this Brunswick East house was recently sold for $3.4 million to a foreign investor.

To illustrate, a house built in 1910 sold for an incredible $3.4 million at a recent auction. The house, which began at a starting bid of $1.5 million and rose by increments of $100, 000 was sold to an international investor who bid via mobile phone!

Brunswick East is followed by Carlton, Fairfield, Carlton North and Fitzroy North as some the most difficult suburbs to buy into.

Conclusion

In a neighbourhood like Brunswick East, there is high potential for capital growth (5.06%) given the amenities in the locality.

But, the increase in property prices in Brunswick East has an undeniable knock-on effect on rental yields. After all, rental that is too high forces potential tenants to look slightly further afield for something better. Yes, it is a constant juggle.

However, as with the law of physics, so it is with the property cycle: what goes up will come down. Prices can only go so high before the market rights itself.

What will remain constant is the demand for rental housing. Here are 3 reasons why:

  • A 2.1% vacancy rate
  • 20% residents are students (Uni of Melbourne and RMIT are about 10 minutes away)
  • Good public transportation system with direct access to CBD
  • The incredible growth rate of Melbourne’s population – more people, more need for housing (100K migrants per year; Victoria’s growth rate of 1.8% surpasses W. Australia (1.6%) and NSW & Queensland (1.4%)
Capital Growth in the Lygon / Brunswick East suburb

Additional reading:

  1. Time Capsule House in East Brunswick to go Under the Hammer
  2. Brunswick East the Most Difficult Suburb to Buy a House
  3. The Melbourne Market Will Continue to Perform for Investors if you Know where to Buy
  4. Melbourne’s Little Italy A Guide to Lygon Street
  5. Buying into A Tightly Held Suburb of Melbourne

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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The State of Melbourne and Sydney Property Markets

Property investment is viable in Brisbane as the market is more affordable than Melbourne & Sydney, and has entered into an expansionary/ growth phase.

Speculations on the Melbourne & Sydney property market following the Australia Bureau of Statistics’ (ABS) latest figures on home prices in the June quarter, have been pretty disparate.

According to the ABS, Melbourne & Sydney had posted home price rises of more than 1% in the June quarter, with prices rising by almost 9% in Sydney – more than twice Melbourne’s 4.2% gain. This comes on the back of a tighter regulatory environment, including the crackdown on errant foreign investors.

Experts from Morgan Stanley and Goldman Sachs have pointed out that a recession could be imminent as auctions for homes in Sydney and Melbourne soften.

Conversely, some of Australia’s leading economists say that there is no bursting bubble in the near future, predicting that Melbourne & Sydney could enjoy strong growth this coming year. An exclusive Fairfax Media survey of 25 leading economic forecasters reveals that most believe house prices have risen for fundamental economic reasons and NOT over-exuberance from investors.

Apparently, only a third of economists (7 out of 25) believe that there is a housing bubble in Sydney or parts of Melbourne.

Despite the woes of rising house prices, housing investment is deemed the only really bright spot and, perhaps, the wisest option for saving.

However, it seems that the more widely held view is that growth is set to moderate. UBS economist Scott Haslem says that the banks see a “moderation of strength”, not a “downturn”, and that “the outlook for housing depends on who and what you ask” while at the same time cautioning that some factors are hard to quantify.

At the end of the day, it is imperative that you read and do your research while keeping in mind the various methodologies used by the different experts in interpreting data. Be sure to questions and talk to as many people as possible to make informed decisions.

There is, for sure, a sound alternative. The housing market in Perth and Brisbane are more affordable, with prices expected to appreciate as they enter into an expansionary/ growth phase in the property cycle.

Looking for Australian property? Need to speak to someone? Call us at 03-2162 2260.

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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The Changing Face of Melbourne

There’s no denying Melbourne’s reputation as the Most Liveable City in the World. Bestowed on this beautiful city four times, this ranking holds merit, evidenced by the population growth over the years. What was once a backwater town has boomed into a world class city.

And there’s no stopping this growth, by the looks of it: Melbourne is slated to overtake Sydney as the biggest city in Australia in the near future. What does this mean and what solutions are being explored to accommodate such growth?

7 News highlights this in their special two-part report:

Part 1: 7 News | The Changing Face of Melbourne 

Part 2: 7 News | The Changing Face of Melbourne 

An increased population will lead to a continual sprawl in the city and drive the demand for housing. And as migrants continue to move into Melbourne, there will be a greater need for rental accommodation.

Timing is just as important as location and other factors when it comes to investment. Are you now thinking of exploring options in Australia?

Need advice? Call 016-228 9150 or 016-228 8691 to arrange for free consultation at your convenience.


CSI Prop promotes international investment property to investors in Malaysia and Singapore. Our portfolio comprises residential property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield) and Australia (Melbourne, Perth, Brisbane). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260