Melbourne properties – the loss, the good and the future?

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I visited Melbourne for the very first time a few months back. It was my 4th visit to an Australian city and I must say Melbourne looks more metropolitan than Perth which I visited twice before. Then, I checked and came to know that Perth has a population of around 2 million while Melbourne’s hitting close to 5 million as at end 2017. It was growing by 3.21%. (Source here)  When it comes to property investment into Australia, two major cities are always top on the list; Melbourne and Sydney. Then, I read two not so awesome news about Melbourne.

First, the city of Vienna has overtaken Melbourne to be ‘Most Liveable City’ in the world for 2018, as per the Economist Intelligence Unit. (Source here) Melbourne was the winner for the past 7 consecutive years before losing its crown. Second news was the overcrowding issue for Melbourne and Sydney. Both these cities took in 90 percent of all new arrivals into Australia. This has taken a toll on the public transport serving the cities and there are now plans by the government to slow down the migration into these two major cities. An article here.

Distance and Investment reasons – When we look at the ‘lost’ of the Most Liveable city crown to Vienna and look at property investment as a Malaysian (who’s already looking at overseas property for diversification), I think we should also realise that Vienna is 18 hours away by flight from Kuala Lumpur while Melbourne is less than half of that at just 8 hours. The usual reasons for property investment is also for future capital appreciation and it is very important to ask if the attractiveness of Melbourne as a good place to stay, enjoy and invest has actually changed because of this loss. Based on my visit in June, I think Melbourne remains a hot favourite city and will be the same for the future.

Infrastructure and Amenities – The notion that supermarkets are all closed at 5pm is actually not true at all. When I was in Melbourne, from my hotel within the city centre, it was within walking distance to three hypermarkets which were open until 10pm or later. In fact in all my trips with the city’s trams, they were all on time even if not right on the dot like that of the Japanese Shinkansen. (bullet train). The streets are always clear of rubbish and the public toilets should be an example for our country, seriously. The construction for the upgrade and enhancement of the rail system which was happening in many places within the Melbourne city was also very professional. Disruptions to the traffic was minimal if any. I think infrastructure and amenities are two critical reasons why Melbourne continues to be within the top most liveable cities of the world. There are supermarkets in the city open till midnight. This is due to the ever growing population in Melbourne. Many new train stations are now being built for the convenience of tomorrow. (Source here) 

International students – Melbourne remains a hot favourite for most international students too and it’s not just for Malaysians. Education is Australia’s third largest export after iron ore and coal. This tells us a lot about the extent of the demand for properties because many parents were buying properties for their children’s university years and beyond. There are at least 300,000 international students in Australian universities and more than 20% of the total are within the Victorian state where Melbourne is. (Info Source: AustralianUniversities.com.au)  Many of these future graduates may be working in Melbourne in the future too leading to demand expansion beyond just university accommodation. Beyond just the international students, many people from the regional and interstate are moving into Melbourne due to job opportunities and the cost of living which is cheaper than Sydney. Median property price in Melbourne is also lower than Sydney.

Future capital appreciation?  Property prices should not move up indiscriminately. If it moves way too fast and keep going up without any pauses at all, we are looking at a potential bubble which may burst once the income could no longer support it. There are now predictions that property prices in Melbourne could fall up to 15 percent from its peak. Apparently, perhaps prices for some areas have risen way too much. Article here.  This prediction is seen to the be worst case scenario but we must note that even at this level, it merely takes the property prices back to the 2015 level. Now, the next question is this, are we confident with the Australian economy? We should always note the property market will always have a cycle. As long as we have confidence with Australia, eventual growth and profitability may be inevitable.

It is very important to note this, “Sydney and Melbourne office space failing to keep up with demand.” This tells a lot. Businesses are expanding but they could not find enough office space. With more businesses, there will be more job opportunities and this meant that the population growth in the two major cities in Australia will continue to grow, even after taking 90 percent of all the new arrivals into Australia.

Last but not least, property investment is a long-term decision. If the thought is to buy now and sell next year, I am not sure if there are any cities in the world which could fulfil this requirement. If we are looking at one of those advanced property markets in the world with cities within the world’s most liveable cities, then Australian cities do make perfect sense and within Australia, two cities stand out; Melbourne and Sydney. Please do not buy without understanding and asking lots of questions though. Perhaps this upcoming event by an Australian property developer of over 20 years, Resimax may be of interest. Learn, Ask and Decide later. Details as follows:

To learn more about Property Investment in Melbourne and Australia, attend Property Power- a FREE Australian property education seminar at the Intercontinental Hotel, KL on 24th November, 2018. For more information and registrations visit: https://propertypowerkl.resimaxgroup.com.au/

At the seminar, these are the TOP 4 things you will learn:
How to invest with minimal risk and achieve high rental yields
From an Australian tax accountant about the tax laws of Australia for foreign property investors
From a finance specialist and guest speaker- what you need to know in order to secure the best financial deals
How to avoid the most common errors made by foreign investors

To find out and register for free, click here. Property-Power by Resimax

Feel free to get in touch with them too:

RESIMAX MALAYSIA SDN BHD,
UNIT 29-1, LEVEL 29, TOWER A,
VERTICAL BUSINESS SUITE
AVENUE 3, BANGSAR SOUTH,
NO. 8, JALAN KERINCHI,
59200 KUALA LUMPUR.

TEL: 03-27839678 / 017-2233965 (Mobile No.)

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