Melbourne was the second strongest performing property market in 2014, but as always the market was very fragmented.
Overall, the Melbourne house market rose by 8.4 per cent but apartments only recorded a rise of 1.1 per cent as a result of high levels of supply; particularly in the inner city high rise market.
The top 10 Melbourne suburbs ranked by growth in house values in 2014 were dominated by some of the cities most expensive suburbs and they were located south of the Yarra.
South Eastern Suburbs Outperform
Corelogic report that Armadale, Caulfield North and Kew experienced the highest growth in house values and this is reflective of a number of factors including that the strongest rate of value growth being recorded in the middle and upper segments of the market.
At a broader level, the fundamentals of the Melbourne property market remain sound.
A major contributor to these fundamentals is the positive impact on housing market from supportive monetary policy in the form of a record low interest rate.
Furthermore, ongoing strong overseas migration to Victoria and a record high influx of residents moving to the state from the rest of Australia also helps to support housing demand.
However house value growth slowed from 3.8% in the September 2014 quarter to just 0.8% over the final quarter of 2014.
I see softer growth this year also, which means property investors will need to be very selective when choosing a property, avoid areas where there is an oversupply and buy properties to which you can add value, thereby “manufacturing” your own capital growth.