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Melbourne’s housing market is beginning to show signs of recovery, with prices increasing by 2.5% in the 3 months to August, according to a report released by RP Data.
While Victorian property prices are still relatively flat compared with the same time lastyear, there is room for continued growth and encourages buyers to take advantageof the favourable buying conditions this spring.
It's a buyers' market.
We are expecting to see the volume of homes on the market lift to around $70 million in value per week over October and November.
Buyers are already showing more interest as they see an increase in properties available to them.
This increase in listings is a good indication of buyer confidence and will result in less competition and more choice for buyers, creating 2nd and 3rd options in their property hunt.
This coupled with the softer house prices we are currently experiencing creates great buying conditions.
It’s the time in the market, not timing the market that counts. Buying now in the right areas will see you prosper in the future from your decision to act.
Inner and mid belt family homes to perform well. Investors and homebuyers should be looking for homes located within the inner tomid belt of the city.
Astute investors should be looking in established areas like Kew East, Collingwood,Carlton, Fitzroy, Coburg North, Hawthorn East, Glen Iris, Oakleigh and Macleod.
This type of housing stock is well insulated from the current oversupply of newapartment developments in inner as well as the further expected correction in the$2m+ housing stock.
These inner and mid belt areas can prove to be an excellent return on investmentfor both investors and owner-occupiers. Those purchasing to build their investment portfolio should expect to see consistent rental returns and low vacancy periods,whereas owner-occupiers can have confidence that their home will experience strong capital growth.
Here are our seven top picks:
Albert Park features some of Melbourne’s most prestigious, heritage listed property. St Vincent Gardens is surrounded by multi-million dollar houses and whilst the top end of the market has softened recently apartments in the area have experienced double digit growth at  13.5% (source: APM). Albert Park attracts aspiring young professionals aged 25-39 (source: ABS) who can’t afford to purchase houses here but want to live in the area. Therefore demand is quite strong and consistent and vacancy rates are low at 2.4% (SQM) Kew East is an excellent area for a family or conservative investor to buy an attached or detached house in. Kew East is slightly more affordable than Kew, is 9km from the CBD, within a few kilometres to excellent schools, universities, shops and a multitude of transport options. Due to the suburb’s inhabitants being mainly 35-49 year’s old the suburb is rather resilient to mortgage stress and market corrections. The year of 2011 saw Kew East grow by 8% (source: Residex) where most of Melbourne saw negative growth. Current clearance rates are also trending above average at 63%; showing that the market here is healthy. Carlton is an excellent area for investors. Units here are still good value for money, which has seen this sector experience 15.9% Capital Growth over the last 12 months (source: APM). The population mainly consists of 20-29 year olds (source: ABS), who are attracted by the university district, proximity to the CBD (2km) and lifestyle attractions such as Lygon Street’s cafés and restaurants. Due to these fundamentals, vacancy rates are below Greater Melbourne’s average currently sitting at 1.1% (source: SQM Research). Carlton in recent months has also seen an increase in online interest (source: realestate.com.au) and when coupled with a 77% clearance rate this could suggest that the area’s growth spurt is not over. Collingwood is only 3km from the CBD and units here sell for around $500,000. The suburb has plenty of life with most people being 25-39 and as such has an excellent rental market. Vacancy rates here are 0.3% and units attract reasonable yields. The area has seen good capital performance for units over the last year at 4.1% (APM). Online activity for the suburb has sharply increased over the last three months and this is starting to be reflected in the clearance rates which are now above Melbourne’s trend line. Fitzroy has seen a retracement over the last 12 months which has created some good buying opportunities in the low to mid $500K range. This suburb is ideal for savvy investors who are able to understand what properties have enough character to attract the trendy 30-39 year old tenant market. Right now we’re seeing the right properties in good streets fetch excellent results and now that the suburb has become more affordable the clearance rate has shot up to 77% which is one of Melbourne’s highest results. Coburg North is an area a statistical/technical investor would look to. Fundamentally there isn’t any main driver promoting growth but with this said the suburb has shown remarkable resilience to the down turn with units growing 3.5% over the last 12 months and the long term trend being 15.2% over 10 years. There are some great buying opportunities for villa units and town houses in this area as they’re still somewhat undervalued. Oakleigh apartments have shown amazing growth over the last 12 months. This segment has seen 16.5% growth for properties that are within the $400K-500K band. Clearance rates are high at 76.6% making Oakleigh a mini hot spot. Surrounding suburbs are also performing well but it is critical in these locations that you purchase apartments that tick all of the boxes as substandard properties are less likely to deliver quality returns.
Infolio Property Advisors will be running a free seminar featuring an expert panel that all Property Observer readers are invited to attend. “Buy Property Like A Professional” will be held on October 2, at The Point Albert Park, Melbourne. Head to <a href="https://www.infolio.com.au">www.infolio.com.au</a> for more information. 
Cameron Deal is the founder Infolio Property Advisors.
 
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Seven Melbourne hotspot suburbs for spring property investors

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As the end of financial year fast approaches, there are a number of tax and other benefits that can be associated with owning an investment property. 
1. Get the facts
Regular and concise information is imperative to the smooth management of your investment, particularly during the leasing process. A good property manager should provide you with detailed reports about the performance of your property. To that end, annual income and expenditure statements should be provided along with monthly rental  statements.
 
2. Prepay expenses
In most cases for investors, the best way for to boost your property investment refund is to pay for any expenses before June 30 – that way you can claim these expenses as a tax deduction in the 2012 financial year. Typical expenses include rates, body corporate fees, borrowing costs, property management costs and insurance. If you have a high income you may even consider bringing forward required spending such as repairs. This can help you to reduce your overall tax bill. 
3. Know your personal tax position
Before you lodge any expenses it’s important that you consider your tax position carefully. For example, if you have multiple investment properties that are negatively geared (the rental income is less than the expenses of the property), the negative amount could be offset against other income including salary. 
4. Obtain a quantity surveyor’s report
Deprecation refers to a value assigned to the wear and tear of a property of equipment. You can claim a tax deduction for wear and tear without spending any additional money. To ensure you get the maximum deduction commission a quantity surveyor’s report on your investment property.
 
5. Pay up superannuation
If you are self-employed or employed by your own company, paying into your superannuation before the end of the financial year can be an effective way to minimise tax.
 
6. Cash is king
Lodging your tax as early as possible will help ensure your receive your refund sooner, therefore resulting in a boost to your cashflow.
 
7. Engage an expert
To get the most out of your return we recommend investing in an accountant who specialises in property investment.
 
8. Plan for the year ahead
Now you have done all the hard work why not take the time to sit down with a property advisor and plan the year ahead. Are their opportunities to build your portfolio? Could a renovation help you achieve a higher rental income?
 
Cameron Deal is the founder of Melbourne buyer advocate and property advisory company <a href="https://www.infolio.com.au" target="_blank">Infolio Property Advisory</a> 
For <a href="http://propertyobserver.com.au/ebooks/free-ebook-top-21-tax-strategies" target="_blank">more end-of-financial-year tax strategies, download our free eBook.</a>
 
 
 
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Eight tips for property investors to maximise their end-of-financial-year tax returns

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1. Plan and research your investment
Buying an investment property is a significant outlay, and making the time to plan and research is essential to achieving a good result. Start by creating a long-term plan with a clear and realistic vision of what you would like to achieve through your investment. This should include working out a budget and considering whether you want your investment to deliver a high rental yield or strong capital growth.
 2. Location is king
Look for properties in established areas in areas no more than a 10- to 12-kilometre radius of the CBD that have a history of strong long-term capital growth. The location should offer good transport links, schools and recreational space. Avoid busy roads, property within earshot of train or tramlines and areas earmarked for significant development.
 3. Seek scarcity and desirable features
A limited supply or unique feature will ensure strong rental demand and deliver healthy capital growth. Period styles such as art deco traditionally outperform newer properties. Desirable features such as balconies and car spaces can also add significant value to your investment.
 4. Don’t over capitalise
Buying within the median price of an area and being smart about renovations will ensure the property will be both easy to rent out and sell when the time comes.
 5. Enlist the help of experts: buyers’ advocate, financial planner, property manager
Enlisting the services of an expert at the vital stages of your purchase and the ongoing management of the property could pay dividends. Engaging an experienced buyers’ advocate takes the guesswork out of buying an investment property. A buyers’ advocate will help eliminate common purchasing mistakes, identify “investment-grade” properties and negotiate favourable terms on your behalf. Seek the advice of a financial planner to develop a framework around your assets and liabilities, select the best loan and use negative gearing as a tax offset. Invest in the right property manager. Property management can make or break your investment – the last thing you want is a rundown property or unhappy tenants. Look for a committed property manager who cares about your investment, ensures the property has reliable tenants and that provides regular rental statements so you can measure your return.
 
Cameron Deal is founder of Melbourne buyer advocate and property management agency Infolio. He will be hosting a free property seminar <a href="https://www.infolio.com.au/blog/?p=945">“Buy property like a professional” on March 26</a>.
 
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Five tips for buying an investment property

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Purchasing a property is one of the biggest financial commitments you’re likely to make in your lifetime.
Only certain properties should be bought without you seeing them first. I recommend that those looking for a new home to live in themselves should see the property in question before making an offer.
However, purchasing investment property can often be done without the buyer seeing the property at all. Successfully purchasing a property without viewing it beforehand is dependent on the level of trust you have in the buyer’s advocate you have engaged.
When presenting a property to a client, I provide them with a detailed report that includes historical growth patterns and market value for properties within that specific area. We also provide detail on land size, orientation and comparable sales evidence of similar properties.
When engaging someone to act on your behalf it’s important you’re confident that they’re acting in your best interests. It’s imperative that they have extensive knowledge and experience in the property industry. This ensures that they are well across property market in the area that you’re looking to invest in.
Three important factors to consider when selecting someone to purchase property on your behalf:
1. Experience
Certification and experience provide a base for grounding and trust. Look at a buyer’s agent’s history; has he or she had experience in the property industry? Working in a variety of roles in the property industry enables a multifaceted understanding of the property market. If your buyer’s advocate is also a licensed real estate agent, he or she will be familiar with selling techniques, growth patterns and auction clearance history. Industry experience is integral to an ability to build relationships.
2. Industry relationships
Pre-existing relationships with real estate agents enables buyers’ advocates to unearth properties that are yet to be advertised to the wider market and present them to their clients.
3. Set fee vs. percentage of the purchase price
Engaging professionals to act on your behalf will take the stress and complication out of purchasing property. When engaging a company, look at whether its fees are based on a percentage of the final purchase price or whether they’re set from the beginning. It’s important that you can be confident your advocate has your best interests at heart and won’t be making more money should he or she recommend a more expensive property.
Cameron Deal is senior buyer advocate at<a href="https://www.infolio.com.au/" target="_blank"> Infolio Property.</a><a href="https://www.infolio.com.au/" target="_blank"> </a>
For advice on buying your first investment property<a href="http://propertyobserver.com.au/ebooks/first-investment-property-a-beginner-s-guide" target="_blank">, download our free eBook.</a>
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Cameron Deal

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