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GUEST OBSERVER 
The outer west remains one of Melbourne’s most affordable pockets to buy property. And with interest rates at record lows, we have seen many buyers dip their toes into the market this autumn.
The reduction of the cash rate by the Reserve Bank often impacts the price-sensitive segments of the market, and this has certainly been the case in Melbourne’s west.
While renting has traditionally been the norm in Melton, residents are now considering entering the market for the first time. The median house price across Melbourne sits at $688,000, but in Melton you can still get a three bedroom family home for a median house price of <a href="https://www.hockingstuart.com.au/recentlysold/26_BARRIES_ROAD_MELTON_VIC_3337_SOLD" target="_blank">$226,000</a>.
As such, young families and couples renting a large family home are realising mortgage repayments in the current economic climate is similar to that of weekly rental payments.
That’s why this quarter we’ve seen a flurry of activity from the younger, family orientated segment of the market who now realise that the Great Australian Dream might actually be in reach.
The affordability factor is no doubt drawing people from greater Melbourne to the outer west. In fact, <a href="https://www.melton.vic.gov.au/Council/About_the_City/Demographics/Growth_Statistics" target="_blank">City of Melton statistics</a> show that between 2001 and 2014 the estimated residential population of Melton more than doubled, and in 2013, the region had the fifth fastest population growth in Victoria (4.3%).
Population projections also indicate that Melton’s population will be more than 315,908 by 2036, which is almost the size of our nation’s capital Canberra. If Melbourne’s house prices grow as much as they did in the first quarter of this year (11.1%), then we expect to see a rise in demand for the outer suburbs where buyers can have space and value for money.
Another drawcard for families relocating to the west is the vast improvements to amenities and infrastructure in the area. For instance, the Council of Melton has recently completed new state of the art five-green-star accredited library and learning facility, as well as the Taylors Hill Youth and Community Centre.
The likes of Palmerston Street, Brooklyn road and Greigs Road are also undergoing refurbishments to ease traffic in the area. The countless number of amenities and infrastructure improvements make Melton a more desirable place for families to live in. 
The perfect combination of population growth, improvements to infrastructure, good borrowing conditions, low vacancy rates and low median house prices have also attracted savvy investors to Melton. Vacancy rates are notably low in Melton – sitting around 2.2%.
Investors therefore are privy to a low risk investment with low upfront capital. And if the rental returns are good enough, some can even positively gear their investment.
The Reserve Bank just cut interest rates to a record low of two per cent, and this will continue to drive interest into the outer west from first home buyers and young families. We will even start to see the dial quickly shift from renters to buyers in suburbs like Melton as these savvy buyers realise the benefits the area brings.
Julian Conte is director of hockingstuart Melton. He can be contacted <a href="https://www.hockingstuart.com.au/?pagecall=staffMember&amp;staffID=96340" target="_blank">here</a>.
 
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Affordability is driving a strong property market in Melbourne’s outer west: hockingstuart Melton

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Located 40 minutes to Melbourne’s west, the satellite city of Melton has weathered the ups and downs of the property market better than most. As a result of its location and relative affordability – our median house price is half of Melbourne’s at $250,481 – Melton has remained attractive to first-home buyers, investors and renters alike.
While traditionally many Victorian suburbs record a spike in activity during  spring selling season, in Melton our market generally remains consistent throughout the year due to high supply and demand and that all-important affordability factor. So while Melton hasn’t experienced a sudden flurry of activity there has been a noticeable upswing in market confidence this spring. Improved buyer sentiment has encouraged sellers, previously hesitant to enter the market, to list their properties – but this isn’t just because spring has sprung, it’s about stronger economic conditions.
At hockingstuart Melton we’ve seen the average number of days on market drop by 30% since the start of 2012 and the number of homes we’ve sold increase by 27% from August to September.
Melton’s growth is largely due to the fact it has remained an affordable option for those looking to buy and invest. Decreasing interest rates has helped by encouraging more first-home buyers and investors into the market. Consequently, properties at the lower end of the market are proving very popular. So far this spring, homes in the $200,000 to 300,000 range have been selling exceptionally well, and we’re expecting this to be the case for <a target="_blank" href="https://www.domain.com.au/Property/For-Sale/House/VIC/Melton-West/?adid=2010041504">18 Ridgeway Drive</a>.
With the first-home bonus for newly built homes scrapped earlier this year, established properties are currently the most popular, as they’re a cheaper alternative to new homes – we recently sold this three-bedroom family home at <a target="_blank" href="https://www.realestate.com.au/property-house-vic-melton-111236091">42 Penguin Street</a> for $226,000. That said, recent trends in our market show first-time buyers prefer new homes if they can afford it, so with further interest rate cuts predicted and the resulting increase in the affordability of loans, we’ll likely see renewed demand for new homes.
 
At the same time, developers are struggling to sell homes off the plan as the market is flooded with blocks of land and house-and-land packages being offered for sale. Buyers prefer a finished home they can walk through, touch and see. For example, <a target="_blank" href="https://www.realestate.com.au/property-house-vic-melton+west-111792155">12 Rainsford Place</a> was sold in just two days and <a target="_blank" href="https://www.realestate.com.au/property-house-vic-melton+west-111706099">2 Ormonde Esplanade</a> in two weeks.
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In terms of rental yields, the greatest return on investment is coming from investment properties priced between $200,000 to 250,000 (returning between $250 to 285 per week) and in some cases allowing investors to positively gear their property – a rarity in recent years. Further up the scale, investment properties between $250,000 to 300,000 are showing rental yields approximately matching the repayments of investors (up to around $300 per week).
At the higher end of the Melton market, in the $300,000 to 400,000 bracket, we’re seeing a trend in families look to upgrade to larger homes on large blocks within 40 minutes of the city.
Likewise properties priced above $400,000 are attracting increased interest from home buyers. For example, we recently sold a property at <a target="_blank" href="https://www.realestate.com.au/property-house-vic-melton-111311443">54 Unitt Street</a> at auction for $584,000. There were three active bidders and a crowd of over 40 spectators who saw the property sell above reserve price. Auctions are rare in Melton, given that most buyers borrow approximately more than 80% of the purchase price and the conditions imposed on securing loans of this type see most properties sold privately. To see this level of competitive bidding is yet more evidence of improving buyer sentiment.
So, what is the outlook for the rest of the year? With economists predicting further interest rate cuts in the near future, further aiding Melton’s affordability factor, buyer confidence will only continue to improve and in turn this will encourage more sellers to list their properties.
With all this in mind, I expect to see supply and demand for properties in Melton increase into the new year, driving up median house prices and rental yields. So for budding buyers out there, it’s a good time in Melton’s market cycle to invest – and not just because it’s spring!
Julian Conte has more than a decade experience in real estate and is director of <a href="https://www.hockingstuart.com.au/" target="_blank">hockingstuart </a>Melton and Werribee.
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Julian Conte

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