Located 35km west of Melbourne’s CBD, Melton is an area that continues to grow rapidly as the city’s population continues to expand outward into the Melbourne-Ballarat growth corridor.
Melton started life as a small town, before becoming a satellite city in 1974. It held this status up until 2010, when the State Government started looking to combine the outer suburbs into a broader city area.
Melton was named after Melton Mowbray in the United Kingdom and was established in the 1830’s as traffic made its way to the Ballarat gold fields from Melbourne at the height of the Victorian gold rush.
As a result there has and still is a significant focus on transport in the area. Melton has been identified as one of the most car-dependent areas in Melbourne and relies on a heavy road network, built around the Western Freeway.
There is no major central business district in the area, however, High Street is the main activity centre. The construction industry is the major economic contributor to the area, making up roughly 23% of total output. Construction is also the largest employer with 3,855 jobs contributing 15% of total employment.
The Estimated Resident Population of the City of Melton was 164,895 as of the 30th June 2019. Since 2015, Melton has been growing at a rate of above 4% per year with 2019 seeing 5.22% growth.
The City of Melton has a higher proportion of households in the medium to high income category compared to Victoria. The unemployment rate has been falling over the past few years and currently sits at 6.7%. The value of building approvals was $757m the 2019-20 and this number has been relatively steady over the past five years.
Dwelling Type Demand Profile
Compared to the national average, there is greater buyer demand for houses in Melton compared to units. Across Melton City, the greatest demand is for three and four bedroom houses, with two and three bedroom units making up only a small portion of the demand profile in the area. Four bedroom homes makeup the largest demand sector of the market in Melton City.
However, there is strong growth in demand for rental units, with the rents growing at 5.44% since Q1 2019. That said, there is little buyer demand for one and two bedroom dwellings and lower sales volumes.
As of Q1 2020 the rental yield for houses and units is 3.62% and 4.96% respectively.
How do Melton City houses & units compare to neighbouring LGAs?
According to HtAG property market data, the median house price in Melton City is around A$560,000 with a -3k to + 217K variance compared to the neighbouring LGAs.
The Macedon Ranges Shire has a significantly higher median house price, while Brimbank is also far higher than Melton City.
- Macedon Ranges Shire: A$777,000
- Brimbank City: A$726,000
- Hume City: A$593,000
- Moorabool Shire: A$582,00
- Wyndham City: A$557,000
House prices in Melton City have started 2020 in a positive fashion, climbing by 0.8% as shown on the heat map. In comparison 2 of the remaining 5 neighbouring LGAs exhibited positive growth above 5%, which were Moorabool Shire and Macedon Ranges Shire. While three of the surrounding LGAs saw negative growth in Q1 2020.
- Macedon Ranges Shire: 5.72%
- Moorabool Shire: 5.06%
- Brimbank City: 1.12%
- Wyndham City: -1.63
- Hume City: -2.86%
The unit market in Melton City is limited compared to houses with the units priced at a median value of A$360,000. Neighbouring LGA prices vary in the range of -28K to +91K with the median price for units reported as:
- Macedon Ranges Shire: A$451,000
- Wyndham City: A$410,000
- Hume City: A$406,000
- Brimbank City: A$391,000
- Moorabool Shire: A$332,00
Unit prices in Melton City have seen positive growth in the first quarter of the year with 0.73% increase. Out of the neighbouring LGAs, Melton City has seen the lowest rate of growth in Q1, with Macedon Ranges Shire and Wyndham increasing in value by over 4%.
- Macedon Ranges Shire: 5.68%
- Wyndham City: 4.02%
- Moorabool Shire: 3.07%
- Brimbank City: 2.38%
- Hume City: 1.95%
Property Market Forecast for Melton City Houses
HtAG property market data for Melton City shows that sales volume for houses had been steadily increasing up until 2018 when it began to drop away.
Sales volumes have been steadily climbing since that point, recently peaking in Q4 2019 with 430 transactions. Rental volumes have been in a steady up trend through to the current quarter (2020 Q1).
Median house prices have remained steady since Q1 2019 after reaching A$560,000. HtAG forecasts show that this trend is expected to continue well into the first quarter of 2022 where prices will maintain their current levels.
The median value of 2, 3 and 4 bed houses has remained steady since Q2 2018 at A$440k, A$480k and A600k respectively. However, 5 bed houses have grown steadily in value up to $770k.
After peaking at A$400 per week in Q1 2019, median rents for houses in Melton City have gradually fallen away, to where they currently sit at A$390 per week. The median rental price of 2, 3, 4 and 5 bed houses is A$300, A$370, $420 and $470 respectively.
HtAG forecasts that the median rental value is expected to continue to decline slightly to A$370 by Q1 2022.
Property Cycle Position of Melton City Houses
The market cycle graph for Melton LGA shows a wide range in the median price change over the last 12 years since 2008.
Growth got as low as 0.37% in January 2012, before growing strongly since that point and reaching as much as 11.5% in January 2018 at the peak of the growth cycle. Since that time growth has slowed down during 2018 and 2019 and at the current time (Q1 2020), Melton City is experiencing 0.8% annual growth.
Growth will continue to be low in 2021 and 2022 for Melton City Houses as we reach the bottom of the property cycle. Currently house prices are at approximately 5 o’clock on the property clock and getting close to bottoming out ahead of the next growth cycle.
According to the HtAG forecast, median prices for this LGA are expected to grow at only 0.06% by 2021. The property cycle for this LGA will likely reach its trough in years 2021-2022.
Suburb Capital Growth and Price Variance Heatmaps for Houses in Melton City
The heatmap below represents median price growth in this LGA on an annual basis
The red areas show the suburbs that have decreased in value by 2% in 2020. The suburbs with the negative growth in that range are Truganina Houses (A$546,000) at -1.91% and Plumpton (A$592,000) at -1.70%.
The yellow and green areas show a percentage increase ranging from 2%-6% with the highest growth in the suburb of Melton at 7.65%. While Diggers Rest has seen 7.07% growth and Eynesbury 7.65% growth in 2020.
The scatter plot below shows all the individual sales over the past year and their concentration in the LGA.
Taylors Hill and Caroline Springs are the high end suburbs where most of the sales in the 800K-1M range occurred. Those suburbs also had pockets where sales took place around the 500-600k range.
The vast majority of sales have been in Melton, Melton South, Brookfield and Melton West at lower price points in the 200K to 400K range.
There have only been limited sales in Rockbank and they were predominately in the 400k to 500k range. While sales have been low in Plumpton.
Property Market Forecast for Melton City Units
The median price for units in Melton City is sharply lower than the median price for houses.
Units had a median price of A$360k in the first quarter of 2020 whereas houses had a median price of A$560k during the same period. 2 bed units have a median value of A$330k, while 3 bed units have a median value of $390k as of Q1 2020.
The trend is slightly different with rental prices for units where they have consistently increased to where it sits currently at A$340 per week. 2 bed units have a median rental price of A$320, while 3 bed units have a median rental price of $370 as of Q1 2020.
Sales volumes fell away sharply at the start of 2019 and have since been climbing to where they currently sit with 26 for Q1 2020. While the number of rentals continues to grow steadily.
According to market forecasts by HtAG, the median price of units will continue to remain flat headed into Q1 2022, remaining at A$360k.
However, the forecast for unit rental prices appears to be continuing to increase. By Q1 2022, it is forecast that the median rent will climb to A$370 per week, from where it is currently at A$340.
Property Cycle Position of Melton City Units
Market cycle graph for Melton City units below shows the yearly median price change starting from 2008.
Prices have had two significant growth cycles in that time and have seen maximum growth at 11.83% in 2017. Since that point, growth slowed from early 2017 until now (Q1 2020).
It appears prices are nearing the bottom of the current cycle as growth is currently at 0.73% and likely to decline further into 2022 according to HtAG forecasts.
The dark orange line is forecasting unit prices to show slower growth over the next two years, reaching -0.12% by 2022.
According to the HtAG forecast, median prices for this LGA are expected to remain mostly flat this year, which would suggest that it is nearing the bottom of the property cycle and would be approximately 5 o’clock on the property clock.
The property cycle for units in Melton City will likely reach its trough in years 2021-2022.
Suburb Capital Growth & Price Variance Heatmaps for Units in Melton City
The heatmap below represents median price growth in this LGA on an annual basis for units in Melton City in 2020.
Out of the 4 highlighted suburbs, Melton City has seen the strongest growth of 5.39% in 2020. Melton South has seen growth of 4.27%, while Hillside units are growing at 4.69%.
Looking at the scatter plot, there are far fewer unit sales in this LGA compared to houses. The vast majority of sales are concentrated in the suburbs of Melton and Melton South and are in the 200K to 300K range.
There were some higher priced unit sales in Hillside in the range of 400K to 500K, which were 3 bed units.
Melton City appears to be nearing the bottom of the property cycle with a number of suburbs within the LGA that appear set for strong growth. Given its good access to transport and being in the Melbourne-Ballarat growth corridor, there is the expectation for median values to start another growth phase after 2021-22.
In 2020, the houses in the suburb of Melton have grown at 7.65%. While Diggers Rest has grown at 7.07% and Eynesbury by 7.65% on an annualised basis.
Over the next two years, HtAG forecasts Taylors Hill houses are set to grow by +10.02% by Q1 2022 which is assessed as high confidence due to the strong sales volumes in Q1.
Over that same period of time, Burnside (+10.01%), Burnside Heights (+9.88%) and Eynesbury houses (+9.61%) will all see strong growth which have been assessed with medium confidence.
Rockbank houses are expected to grow at +37.97%, however confidence is low based on low volumes of just 3 sales this quarter.
Melton South is forecast to grow by +1.32% to $448,628 by Q1 2022 with high confidence based on 38 sales in Q1.
Plumpton is expected to remain relatively flat through to Q1 2022, with the median value rising +0.04% to $591,748. However, confidence is only low with this forecast based on only 2 sales in Q1.
In terms of areas that will likely see weak growth by Q1 2022, HtAG forecasts Harkness houses to fall in median value by -2.62% (high confidence), while Truganina houses will also fall slightly by -0.21% over that same period.
The suburbs that are expected to show the strongest rental yields by Q1 2022 are Melton South (4.11%), Harkness (4.07%), Brookfiled (3.97%), Truganina (3.86%) and Melton West (3.77%)
For the unit market, the suburb of Melton is predicted to grow at +7.14% by Q1 2022, with medium confidence. The other unit markets have limited sales data. Yields for Melton units are forecast to be 4.54% in Q1 2022.