Australian Property News

Why Melbourne investors should buy close to transport

Posted on Tuesday, March 08 2011 at 12:04 PM

Petrol prices have been quietly increasing in recent months, mostly going unnoticed. However, new figures released today by CommSec reveal unleaded petrol is now at 139.2 cents a litre – a near 29-month high.

Given the current tensions in the Middle East, prices are expected to rise by another four cents in the next fortnight.

For investors, WBP Property Group's Sean Thomson says increased petrol prices mean there will be more demand for properties closer to the city and public transport.

He says people could be paying as much as $1.50 per litre by the middle of the year, and the cost will dramatically put the brakes on social activities.

"It's going to affect mortgage repayments and where people will buy,” he says. “Commuters will say, ‘I'm stuck in the outer suburbs, I should be closer to the city’."

For this reason, investors should now be looking very closely at properties close to transport. In Melbourne, this means within 20 kilometres of the CBD. 'You don't want to buy where the trains are less frequent between suburbs, or where the trams stop," he says.

"Make sure your investment is close to facilities. School locations will become more important too, because of the travel from home to school and work. If you don't have a school close to your investment, parents have to factor that in too."

Another huge issue, notes Thomson, is that more first homebuyers are likely to start moving back home with their parents if petrol prices continue to increase.

"People will find being out of home simply unaffordable. They're not happy with not being able to save money."

This, of course, means investors should factor in interest rate rises, as well as petrol prices later this year, and work out their budget accordingly.