Invest in Melbourne real estate: Pros & Cons.
Melbourne is Australia’s second-largest population-based city – but perhaps not for much longer, with several observers predicting that the city will outpace Sydney over the next decade.
Melbourne continues to rank on top as one of the most livable cities in the world, and it is not difficult to see why, considering that it is the nation’s sporting capital and a major destination for great food, café culture, fashion and art.
In addition to its many other drawcards, Melbourne, along with a leading economy, provides world-class healthcare, education, services and infrastructure.
A truly global city, and for its portfolio many prefer to invest in Melbourne as a significant property venue.
The Real Estate Market in Melbourne
Melbourne has long been a favorite destination on the Australian property market for investors seeking value. Along with its rapid population growth and strong property values, its status as one of the most livable cities in the world makes Melbourne real estate highly desirable.
Residential investment may have declined in Australia earlier this year, but the demand has strongly reaffirmed itself and reinvigorated real estate investments in major cities. Interest rates remain small and interest rates were cut again in October, bringing good news to property investors.
According to the Real Estate Institute of Victoria, the median house price for Melbourne was $785,000 in the June quarter. Although lower than the 2018 highs, REIV data shows Melbourne’s prices display a stable growth trend – up from simultaneously $701,000 in 2016 and $627,000 in 2014.
Big infrastructure projects such as the Metro Tunnel and a state-wide railway crossing relocation project not only boost public transport links but also benefit the increasing population of Melbourne. Melbourne is Australia’s fastest-growing city with the Australian Bureau of Statistics estimating it will overtake Sydney as the most populous city in 2031 with a predicted population of 8.6 million to 12.2 million inhabitants.
Outer suburbs benefit from government-backed growth management programs that promote neighborhoods with close-to-home employment, shops and transportation links.
The Melbourne property market has a great deal to offer across the board to investors, but some suburbs offer more value than others.
Melbourne Investing: Is it a good idea?
According to the Real Estate Institute of Victoria (REIV) latest market data reviews, the average house in Melbourne takes 34 days to sell – down from 42 days from the same time in 2019.
Outer Melbourne is Metro Melbourne’s fastest-selling area, with outer ring suburbs taking an average of 33 days to sell, followed by Middle Melbourne with 34 days and Inner Melbourne with 41 days on the market.
Outside the city, Victoria’s regional homes see on average 55 days on the market. It is down from the 57 reported in November 2019.
Investments for foreigners. Is it possible?
Yes, but there are some conditions. Non-residents need to apply to the Foreign Investment Review Board (FIRB) for permission to purchase residential real estate in Australia – whether you want to live there or use it as an investment property.
As part of the federal government, the FIRB is responsible for ensuring that most foreign investment in Australia is directed towards new dwellings, which create new jobs and lead to economic growth, as well as preserving Australia’s current housing stock for local residents to purchase.
All foreigners must apply for approval before taking an interest in any residential property; the only exceptions are citizens of New Zealand, permanent Australian residents and their spouses.
If you’re looking to purchase a new dwelling or vacant property, the news is good – most of these proposals are approved as they encourage the construction of new housing. The only condition is to complete construction on land within 4 years from the date of purchase.
If you are trying to purchase an established dwelling (i.e. an existing house) then the news is not so good, unfortunately. It is usually forbidden for non-resident foreign citizens to purchase existing properties in Australia, the rationale being that it deprives Australian buyers of a property they might purchase and stay in.
That said, there are many cases where buying an existing dwelling may be allowed in:
- Temporary residents can apply while living in Australia to buy a home to reside in. Usually this is conditional upon you selling the home after you leave Australia, or eventually becoming a permanent resident or citizen. Unfortunately, non-residents are unable to buy a house to rent out or use as a holiday home.
- International residents may apply for renovation to buy a home, such as tearing down an old home to create an apartment block. This is normally only approved as long as two houses are built for each demolished, in order to encourage greater development of housing.
- Foreign businesses with a significant local presence can buy homes to house their Australian staff, although businesses can not purchase property for investment or rent.
You still not sure?
Melbourne is also called one of Australia’s best places to live. There is no shortage of things to do as the country’s second-largest city, and there are suburbs and districts to suit everybody. Unemployment is fairly small and Melbourne is also ranked as one of the best student cities in the world, making it suitable for the entire family.