First homebuyers continue to drive the strength of this state's market at the lower end, although investors may be better off looking in other sectors without the competition
While growth may be limited in the short term, investors can rest easy that the Melbourne market will at least remain fairly stable, say property experts.
Fundamentals such as population growth, infrastructure and affordability have kept the Melbourne market strong, even as the economic downturn has pushed consumer confidence downwards. And with the boost benefiting first homebuyers being extended recently, that market stability has received another shot in the arm.
"Combined with the historically low interest rates, you've got a tremendous amount of momentum and stimulation that is happening in that lower market," says Monique Wakelin, director of the Wakelin Property Advisory. "That's really the key trend right now."
She says it has been welcoming to see Melbourne's market respond as it has thus far this year.
"Prices are standing still," Wakelin says. "Given the fact that we're in an economic downturn, that is a fabulous outcome."
Armed with tens of thousands in incentives, first homebuyers have been getting into the market at a price that has kept competition strong. The Real Estate Institute of Victoria reported the state's auction clearance rate for residential property surpassed 80% for multiple weeks in May. It's a result that surpassed expectations, and more properties have begun to return to the market after months of limited supply.
But first homebuyers have been picky, and haven't been choosing the same hot spots of the past. Instead, they've been going to some of the more affordable suburbs still within close range of the city, such as Melbourne's inner west. They're also going out to the north and northwest where house and land packages are still within an attractive price range, says Wakelin.
First homebuyers have been priced out of many traditional prime inner suburbs, and are instead buying up in neighbourhoods with previously lesser reputations, or further out from the city, she says.
In the inner west, that means buying a more affordable property, and upgrading through renovations. These areas still have the basics of nearby schools, shops and health care, but may soon also see more improvements as more young buyers move in.
"It's gentrifying areas where the fundamentals are already there," says Wakelin.
Footscray, Maribyrnong and Glenroy are some of those tipped for future growth as they gain in popularity.