Every day there are stories in the press about whether we are in a property boom or bust, making the case for one or the other supported by a lot of confusing analysis on debt to income ratios, price to yield ratios and many other facts.
Interest rate cycles come and go. Negative gearing tax concession and first home buyers’ policies come and go. Apartment development booms and busts come and go. And there will be ups and downs in the short-term property market. But the long-term investment thesis for Melbourne property (especially with high land content), looks sound for as long as population growth continues. So will growth continue?
About a decade ago, I was the Parliamentary Secretary to Premiers Bracks and Brumby. On the first day of Office, when any new Government gets elected, they are greeted by the Public Service with a briefing on the ‘state’ of the State. And every incoming Government gets the same speech. It goes something like this:
“Congratulations, Premier and Ministers on your election. As the Public Service we are here to faithfully carry out your promises to the electorate without fear or favour. If we may, however, just make one thing clear … the entire Victorian economy is geared around population growth and housing construction. So, if you don’t want to create chaos and you want to get re-elected, please don’t mess with that. Are we clear? Good then, how else can we help? …”
That’s why I am confident, regardless of who wins the State election in November, that population growth is likely to continue. And that is why I personally continue to be a long-term investor in Melbourne property.
Fact: 126,000 people moved to Melbourne last year. Yes, just last year. And about that many will move here again this year. And next. That’s 1 ¼ MCG’s worth of new residents. But as they say about land “they ain’t making any more of it”.