Melbourne’s property market is experiencing a “housing crisis”, with prices increasing by around 10 per cent annually, according to a new report.
Key points:The City of Melbourne is planning to phase out the ‘gig’ rental scheme by 2020The study, commissioned by the city, found homes costing between $700,000 and $1 million are now affordable in the CBDThe study also found the cost of owning a home in Melbourne has risen by nearly 10 per, in the past five yearsThe City is planning on phasing out the “gig” rental scheme, which was first introduced in Melbourne in 2010, and the study found that homes costing up to $700K had gone from being affordable to unaffordable within the past year.
Key point:The study found homes cost between $600,000-$700K are now cheaper in the Melbourne CBD than they were in the 1990sThe study said there was a significant reduction in the number of properties that were affordable to rent, with the average price of a home now being less than $700.
“The cost of ownership in the City of Sydney is now significantly less than it was in the late 1990s and 2000s, while the cost to own a home has dropped by more than 40 per cent since 2010,” the report found.
“Although it is not the most cost-effective method of living in Australia, it is still affordable.”
The City said it planned to phase in the “gentleman’s” rental model in the next five years, which would see properties starting at $500,000, and then increasing by $1,500, with no further increases.
The report also found that the average home in the city had gone up by over 10 per year since 2010.
However, it also found homes for sale in the market have increased by nearly $1m, with some properties fetching up to three times the current market value.
“We recognise that the market is challenging and that some properties are sold at inflated prices, but the City believes that the gentler, less costly alternative is for residents to purchase their home, and to continue to live in it as a tenant,” it said.
“To be clear, the City is not saying that a property cannot be rented, but that residents are able to live there as a resident, and not as tenants.”
Key points :The study estimated that, by 2020, the average Melbourne property would be around $500k more expensive than it is now.
“As the City’s gentler gentler model continues, the price of the average property in the region will increase by about $1.2 million,” it concluded.
“This is an affordability crisis for Melbourne’s residents, with median prices currently being $717,000.”