Why West Melbourne is a smart financial investment
21 January 2018
An investor’s guide to Melbourne’s best kept secret.
Melbourne’s consistently strong property market, aided by the city’s unparalleled liveability, growing population and high relative yields, have attracted record numbers of investors in recent years.
But there is one particular suburb close to the city-centre that is outperforming most of its counterparts, with the sales data to prove its long-term investment worth; West Melbourne – a formerly industrial enclave located just three kilometres from the CBD.
Figures published by Secret Agent in December 2017 show West Melbourne’s median apartment price has grown a staggering 37.81 per cent¬ in the last quarter alone – the highest positive growth recorded across the entire inner-city ring.
This figure is particularly significant given it was achieved during a period where many other Melbourne apartment prices were decreasing in value. For example, well-regarded suburbs including Albert Park, Burnley and East Melbourne all reported apartment price decreases in excess of 28 per cent over the same period.
West Melbourne is also one of the few inner-city suburbs to be experiencing both house price growth (quarterly median change up 24.55 per cent) as well as apartment price growth – a fact that further indicates the strength of the suburb’s market.
While this most recent quarter was undoubtedly very strong for West Melbourne, it is not in isolation. Data presented by leading economist Andrew Wilson in August 2017 shows West Melbourne has experienced sustained unit price growth over the past five years, rising 7.2 per cent compared to only 1.6 per cent overall in the City of Melbourne local government area.
Investors purchasing within the area also currently benefit from the strong rental yield – 4.5 per cent in August 2017 as reported by Domain.
As well as these individual figures and accolades, West Melbourne’s investment prowess is further supported by Wilson’s statement that Melbourne is the “nation’s strongest and most consistent capital city market.”
The basis for this claim stems from a number of key price drivers, namely, the solid economy, low rates, rising investor numbers, record migration, liveability, housing shortages and investor tax incentives.
Reports of an apartment oversupply, particularly among higher priced units, have been consistently debunked by industry insiders such as Wilson who calls this a “fake concept.”
Wilson says the oversupply myth commonly stems from the fact housing demand and supply are mismatched in real time. For example, because apartment developments take several years to construct, new stock typically responds to pent up market demand from three years prior, not the current day.
As more downsizers enter the apartment market and the overall preference for unit living continues, Wilson says apartment demand can be expected to grow only further.
Also propelling West Melbourne’s appeal and prices is gentrification. Previously a largely industrial area, it is only recently that West Melbourne has begun to experience widespread residential development. With this change comes new residents, cafes, infrastructure and overall vibrancy.
Many businesses are embracing the suburb’s history by converting former warehouses and factories into their headquarters. For example, new cafe Apollo is located in an art deco building that was previously a martial arts gym, and coffee shop Roller Door is housed in a converted garage.
A number of additional businesses are also set to join the suburb shortly in association with new self-sustaining apartment development and retail precinct, West End.
Located just 750 metres from the city centre, five minutes from Flagstaff Gardens, a 11-minute walk from North Melbourne Station and a 15-minute walk from Southern Cross Station, West End will introduce a new supermarket, restaurants, medical centre, five-star hotel and four separate residential towers to the suburb, bringing with it a new level of luxury that is appealing to the area’s savvy investors and owner occupiers who are seeking to capitalise on the area’s rapid gentrification.
The development is currently under construction with apartments in its Adderley building, designed by the renowned interior design studio, Carr Design, now selling.
Want to know more? Register your interest for West End’s apartments today, just click here to find out more and be among those who are taking advantage of West Melbourne’s sound investment and capital growth opportunities.
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