Despite the doom and gloom of COVID-19 all over and the Melbourne houses losing more than 5% of value, some experts now believe that prospective home buyers in Melbourne will do better than those in Sydney and should start preparing for their next purchase in 2021.
A critical driver among all other factors is the fact that Melbourne has the strongest long-term projection for population growth in the country. Another important point to note is that houses in Melbourne are materially more affordable than in Sydney.
According to CoreLogic, Melbourne houses declined by 5.5% in value since their peak in April 2020, the largest fall recorded across the major capital cities. Couple that with the mortgage rates falling to ultra-low levels. That in itself presents new opportunities for homebuyers who can negotiate smart targeting well-located houses.
Ultra-low interest rate to drive price increases
“Indeed, we expect 2021 to be a strong year for houses in Melbourne, with significant capital growth forecast to play out” says Doron Peleg, CEO of RiskWise Property Research.
“In terms of its house price-to-income and mortgage serviceability ratios, while Melbourne is relatively unaffordable in global terms, importantly it’s significantly more affordable than Sydney” Mr Peleg said.
Melbourne to become Australia most populated city in Australia
Based on the Australian Bureau of Statistics (ABS) data, population projections show that in 2026 Melbourne will have a larger population than Sydney. Melbourne is projected to have more than 6 million residents in 2030 and around 9 million residents in 2050.
Melbourne enjoyed stronger price appreciation
RiskWise research claims Melbourne has in recent years presented a housing market that is stronger than that of Sydney. It has been amply demonstrated by the consistent price appreciation for houses in recent years.
“Melbourne enjoyed strong capital growth until February 2020, with housing values surpassing their September 2017 peak. On the other hand, despite posting the most rapid recovery trend across the capital cities, Sydney housing values remain 3.7 per cent below their 2017 peak” Mr Peleg said.
“The price increases are in part connected to the stronger population growth in Melbourne, both from overseas and interstate”.
Mr Peleg said that those considering buying a home should seek suburban houses where the budget permits, rather than looking for units in the inner suburbs.
“From a capital growth perspective, we forecast a strong outlook for houses in Melbourne in 2021, but the market for units is much more likely to be flat” Mr Peleg said.
Therefore, if you are financially rightly poised and can afford to invest in 2021, get ready, start your research and cast your keen on the property or properties and extend your other hand to draw the cheque, perhaps in the second and third quarter of 2021.