Now that 2017 has ended, it’s time to reflect on what the New Year may hold in store for the property market in Melbourne. 2017 was a big year for Melbourne, as it outperformed Sydney in the last few months of the year, continuing a trend towards being one of the most popular cities in Australia for property investment.

Most experts agree that Australian house price growth is slowing, but this does not indicate prices will come crashing down in the near future. The Sydney market is expected to stay flat with the excessive growth we have seen to be well and truly a thing of the past. Hobart is expected to show the largest growth in 2018, along with regional areas close to capitals.

The Melbourne market still presents value for money; in the 12 months to June 2017, house prices rose by a solid 9.8% and apartment prices by 2.0%. Victoria is Australia’s fastest growing residential population, with record numbers of interstate and overseas residents selecting to make Melbourne home. This growing population, along with a lower price base and optimistic economic outlook make Melbourne attractive to investors.

But 2018 is likely to see a different result to other years and negative growth across each quarter could occur – prices in Sydney and Melbourne are expected to fall by around 5 per cent or so this year.

So is it all doom and gloom?

No, it is not. None of the factors predicted for 2018 will an issue for the cautious buyer with an eye to a long term future. Property investment always requires planning and consideration of the market and its trends. It can also be a good idea to seek expert advice; Accrue Real Estate staff spend their professional lives following the Melbourne property market so have the knowledge that allows them to point to a property to suit investment needs.

Look to the suburbs

The Melbourne CBD and surrounding areas (e.g. the Docklands) have seen massive development in the past five years. While a city apartment may be attractive, the oversupply could lead to difficulty in tenancy & poor rental return. Capital growth could also be low.

Melbourne’s infrastructure allows easy CBD access from many suburbs 10 – 15 kms outside the CBD. The continued development of roads and rail lines is continually improving this. These areas are attractive to renters and can still provide properties that are attractive and reasonably priced within the current market.

Boutique apartments

Melbourne has seen 158 per cent growth in apartment development approvals and some experts predict an oversupply. This certainly applies to the large scale, multi apartment developments that have sprung up along our railway lines. But there are still many boutique developments in sought after areas that offer value for money. These smaller developments usually provide more spacious living areas, including outdoor areas, and are often better appointed than the large scale 15+ apartment blocks. An apartment of this type can serve as an attractive rental but could also be a great start as a first home.

Investing while renting

While a buyer may still be priced out of the market in the suburb in which they currently rent, the 2018 market might provide an opportunity to purchase an investment property in an affordable suburb. Rental returns assist in mortgage repayments and owning a rental property means that even though they are renting themselves, they are also building equity. Negative gearing also provides some tax incentives.

Jeff Grochowski, a prominent identity in the Melbourne property industry extends some advice to people trying to get started with a home purchase …

“Home ownership is a something Australians aspire to. Unfortunately, it can be very difficult to achieve as it takes an average income earner four to five years to save the necessary deposit. But with creative thinking and the right advice, people can get ahead.”

No one has a crystal ball when it comes to the property market. Doomsayers have predicted a crash every year for the past five years. Yes, 2018 is likely to see stalling in market growth but there is still opportunity for investment with a considered plan.