Why Everlea Townhouses, Keysborough represents a strong buy for Investors now. Top 5 market shifts.

Everlea, a major investment of the Salter Brothers Property Opportunity Fund, is a $50M, 116 Townhouse Development in Keysborough, Victoria.

Location, a history of strong capital growth and future economic prospects all play a big part in our property investment decisions.  However right now, despite the impacts of COVID-19, it’s these factors combined with a shift in conditions surrounding Melbourne’s residential property market, that are creating a strong proposition for investors at Everlea Townhouses, Keysborough. Here we discuss the top 5 shifts that will see the Melbourne property market surge over the coming months, and why Keysborough is right there as a strong investment.

1. Resilient outer suburbs, buoyed by economic stimulus & low interest rates

The Melbourne property market has certainly seen some change over recent months from the impact of COVID-19 and the extended lockdown in Melbourne, however recent reports in both the Australian Financial Review and realestate.com indicate that while inner city apartments and housing have been impacted, properties in outer suburbs have remained resilient, particularly for houses and townhouses, and in areas with top-performing school zones – including Keysborough. As you will see further down in this article, Keysborough’s house prices have increased over the past 3 months, to October 2020.

As we move into 2021, while Melbourne’s immigration and unemployment setbacks will take some time to resume to normal levels, they will be buoyed by recent Federal Budget announcements which focus on job creation, increased debt accessibility and tax cuts across Victoria and the nation. These announcements, which have been well received by the real estate industry as a boost for consumer confidence and to kick start property activity, have already started to drive the Melbourne market this week, and will continue to have a positive impact on Victoria through 2021.

So, when you combine the resilience of key outer suburbs, Government stimulus and support, and the lowest interest rates on record, the conditions for property investors and first home buyers are ripe now.

2. Easing of lending conditions makes it favorable for property investors & owner occupiers

The Federal Government’s budget announcements focus on easing credit restrictions which have hampered property investors since the Financial Services Royal Commission, 2019.  This policy shift by Government has seen Westpac be the first mover this week in lowering its loan assessment rate to 5.05% from the previous level of 7.25% set by the Commission, which essentially means increased borrowing capacity for owner occupiers and investors. We expect that other banks will follow suit over the next couple of weeks and the relaxation of lending rules will drive a marked shift in the provision of debt to property buyers over the coming months.

To illustrate this with an example*, if a borrower has $30,000 surplus income available to service a loan, they previously would have been able to only borrow $414,000, whereas now they can borrow $594,000, effectively increasing their borrowing capacity by $180,000.

So, if an Everlea Townhouse in Keysborough wasn’t accessible to you before, it may be now.

*example is illustrative only based on indicative assessment rates, please talk to your mortgage broker for detail on your specific circumstances

3. Limited availability of new properties to invest in over the coming months

One of the impacts we have seen from COVID-19 is a large number of new residential property development projects being put on hold.  This means that over the coming months, there will be limited availability of new properties coming onto the market for purchase and/or projects with long timelines and extended settlement dates.

Everlea Townhouses, Keysborough is now in the construction stage and with only 20% of townhouses remaining available for sale, purchasers will see themselves settling on properties within 12 months (or 18 months, depending on the specific townhouse purchased).

We know that Everlea Townhouses is a unique development in Keysborough with each townhouse architecturally designed and with an average land component of 134 sqm. An investment here on a brand new property in a suburb with increasing prices, high rental demand and yields, and which can materialise within 12 months, is compelling.

4. Keysborough property prices continue to increase, by 10% over last 3 months

The Keysborough real estate market has experienced extreme price growth over the last 10 years, with specifically 68.2% price growth over the 4 years to March 2020, with new greenfield land developments and townhouse developments. It has been a desirable area for residents living in nearby suburbs, and also couples and young families looking to buy new. According to REIV, the median house price in Keysborough as at Q3, September 2020 is $825,000, an increase of $84,000 over the last 3 months.

This shows that houses and townhouses with a land component are still increasing in price in Keysborough, and with Everlea offering 134m sq of land per townhouse on average, investors are poised for continued strong capital growth. 

5. Keysborough rentals remain strong, with 3.7% yields on 3bedroom townhouses

While there has been much talk about rents dropping in Melbourne during 2020, a report in the AFR this week confirms that ‘this is particularly so in inner-city areas which are more susceptible to changes in overseas migration and international students, tourism and job losses associated with COVID-19’.  Rentals in outer suburbs such as Keysborough remain strong, with the latest data REIV data (Oct 2020) showing that rental yields for units and townhouses in Keysborough are higher than that of homes, with the yield achieving 3.7%, compared to metro Melbourne achieving 3.5%.

16% of Keysborough’s occupants live in rental accommodation with the median rent achieved for 3-bedroom units and townhouses being $440 per week, slightly higher than 3-bedroom homes, at $438 per week.  This data reflects the strong demand for family home and townhome rentals in Keysborough due to its amenities, schools and childcare, and proximity to employment hubs such as Dandenong, Cheltenham and Mulgrave.

If you’re looking to invest in the high growth suburb of Keysborough at a time when market conditions are optimal for investors, and the below characteristics tick all your property investment boxes, talk to Julie Brooks today.

Investor checklist

  • Location – Located 27km from Melbourne CBD and within close proximity to employment hubs such as Dandenong, Cheltenham and Mulgrave, Keysborough is a highly sought-after location in Melbourne’s South-East, and is amenity rich;
  • Quality Design Townhouses – architecturally designed 3bedroom townhouses which include all the inherent property characteristics that drive value – free flowing interior design, private outdoor space, garage and low maintenance;
  • Land Component – A unique townhouse development with each townhouse having an average land component of 134sq m, continuing to drive capital growth;
  • Rental Yields – a suburb and property type with rental yields that outperform the Melbourne average and hold their ground, even during a crisis;
  • Amenities on your doorstep – from shopping centres to primary and secondary schools including the renowned Haileybury College, childcare, universities, parks and golf courses, and close proximity to transport nodes, major arterials and to Springvale and Dandenong – both business and retail hubs – Keysborough is seen as a desirable suburb for families.
Salter Brothers Asset Management Pty Limited: ABN 33 119 833 760, AFSL 308971 is the trustee of all Salter Brothers Funds.