Another study shows the inner suburbs are where to invest in property

If you’ve been following my blogs you’d know I strongly believe the inner and middle ring suburbs of our capital cities are the place to invest in property.target date deadline arrow

I’ve quoted a study which proves not all land is created equal and that’s why you should invest in the inner suburbs

So it didn’t surprise me last year when I read in  The Age  Melbourne could soon have a dual economy: a permanently prosperous inner city, surrounded by ”client” suburbs where jobs are hard to get to and lack security, a new study warns.

And the continued spread outward of the ”already super-sized” Melbourne could leave residents in these new outer suburban areas at risk of ”profound social exclusion”.

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As you’ll read below urban sprawl has created an extreme advantage for those who live closer to the CBD and this has also created a widening disparity in housing values with properties closer to the CBD  growing faster:

The Age reported:

Four of the last five former Victorian premiers talked to economist and planner Marcus Spiller as part of his research, published in an urban planning journal ahead of last week’s new metropolitan planning strategy, Plan Melbourne.houses suburb

Dr Spiller, a principal of influential consultants SGS Economics and Planning, recommends reinstatement of a body similar to the long-defunct Melbourne and Metropolitan Board of Works, as a way of de-politicising planning and tackling the growing social divide of access to jobs.

The MMBW’s planning powers were removed in 1983. But all four ex-premiers – John Cain, Jeff Kennett, Steve Bracks and John Brumby – said there was no use in ”rolling back the clock” to reinstate the Board of Works, which one referred to as a ”dinosaur lacking entrepreneurial energy”.

All four agreed, however, that the elevation of planning as a voter issue and ”the introduction of a new [planning] strategy with each change of government” had exacerbated the ever-outward spread of the city’s suburbs.

Melbourne is one of the Western world’s lowest-density cities, stretching more than 100 kilometres from east to west and 90 kilometres from north to south.

Dr Spiller’s report makes clear the extreme advantage inner-city residents have over the outer suburbs in access to work.

[sam id=50 codes=’true’]

A Carlton resident, the study said, could access 890,000 jobs by driving for 30 minutes in peak hour, while those in Cranbourne East could get to just 345,000.

The disparity in access to employment is even starker for those using public transport: a Carlton resident had 724,000 jobs accessible within a 45-minute public transport journey, compared with just 5000 for someone in Cranbourne East.

Over the past two decades there has also been a widening disparity in housing values.

In 1990, a house within a kilometre of the CBD cost just over $200,000 while a house 80 kilometres out cost a little over $100,000.
By 2010 a house next to the CBD had a median price around $1.4 million compared with between $300,000 and $400,000 in outer Melbourne.

Dr Spiller’s paper suggests that, after the planning functions were stripped from the MMBW, no new force emerged to plan for the entire city.

house computer suburbPlanning ministers had also come to be seen as ”planner-in-chief”, and instead of rising above the political fray had become ”at the centre of the action”, making planning a key battleground.

Instead, individual inner-city councils often frustrated attempts to encourage urban density. Meanwhile, lower land prices encouraged expansion on city fringes.

The Napthine government’s Plan Melbourne predicts the city will grow from its current 4.25 million people to around 6.5 million in 2050.

Key aspects of the plan include a ”permanent” urban growth boundary, encouraging population and jobs growth in regional towns such as Kilmore and Wonthaggi, accelerating planning permit approvals in areas slated for significant housing growth, and encouraging huge employment growth in Melbourne City Council’s area.

 



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Michael is a director of Metropole Property Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He's been once agin been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


'Another study shows the inner suburbs are where to invest in property' have 6 comments

  1. March 20, 2015 @ 9:23 am Geo

    Wondering in Sydney what the Inner or Outer ring suburbs are? What is the definition here for inner and middle rings? Thanks.

    Reply

    • March 20, 2015 @ 3:15 pm Michael Yardney

      Geo
      Firstly we must separate the inner CBD – that’s different to the inner ring suburbs that are gentrifying in Sydney – in particular in the inner west. Thee inner suburbs tend be be in the first 10km or so form the CBD and the outer suburbs are getting further out.

      Reply

  2. March 20, 2015 @ 11:08 am Johnson

    How about the outlook to apartments in inner city (compared to landed properties)? Heard that banks are unwilling to do mortgages for buyers of apartments in inner city or lower their LVR borrowings especially to investors not staying in the same state.

    Reply

    • March 20, 2015 @ 3:16 pm Michael Yardney

      You’re right Johnson
      There is a significant oversupply esp. in Melbourne’s CBD – watch out for my featured blog next Friday where I give details.
      But I’ve never advocated buying in the CBD. – that’s very different to inner suburbs

      Reply

  3. March 20, 2015 @ 8:49 pm David

    Thanks for this article, this sort of knowledge will be invaluable for investing over the next 20+ years.

    Reply


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