Big Data Management Assignment: Case Study Analysis of Melbourne Property Market

INF20016

Big Data Management Assignment

Case Study Analysis

Melbourne Property Insight for Savvy Investors

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Abstract

This report provides a comprehensive analysis of Melbourne's property market from 2021 to 2024, highlighting key trends in property prices, rental yields, and market resilience. Investors are guided on high-growth suburbs, rental opportunities, and risk mitigation strategies to make data-driven decisions and capitalize on market dynamics for long-term gains.

List of Figures

Introduction

The property market in Melbourne has formed a focal point of discussion in recent years due to its nature of being dynamic with growth volatility. Being one of Australia's largest and most vibrant cities, Melbourne offers a rare real estate panorama driven by a combination of urbanization, population growth, and infrastructure development. Investors are increasingly drawn to this market as they seek high returns on their investments. With incrementing uncertainties in the market, due to the fluctuating interest rates, shifting economic conditions, and post-pandemic recovery, there is an emergent need for extraction of insights from data to make decisions. The larger context of probable global economic recessions and growing inflation has further underlined this.

The questions each investor currently faces concern the overall direction of the Melbourne property market. Issues such as: 'Is a down market likely?', 'Are properties close to the CBD more attractive relative to suburban areas?' and even 'To what extent do market fluctuations affect the different types of property? Besides, investors should research the trend of fluctuations concerning rental market trends and medium house prices, by which they will be able to explore certain areas of future growth and resistance (Grau & Fernandez-Abascal, 2019, p.54). This report examines these essential questions through an intensive data-driven market analysis of the Melbourne property market. Based on past and current data, this report will be in a position to inform about market stability, investment strategies by location, any impact arising from changes in the market, and rental yields and house pricing trends. With this, it will provide certain key insights to steer investors toward better decision-making.

Data Quality Assessment

The data for the analysis was obtained from reliable sources. This dataset consists of a selection of several of the most important metrics necessary for the analysis of the Melbourne property market; it includes information on property transactions, suburb statistics, and real estate agents. The dataset consists of a few tables that are: Victoria Property 2021–2024, RE Agents, Vic Regions-Suburbs, Suburb House Price, and Suburb Rental. These are highlighted with clear explanations about the market aspects represented. Key fields in the Victoria Property table such as Listing ID, Suburb, Price, CBD Distance, and Property Type provide prominent data points when determining the relation between characteristics of property and market trends within a single table. The tables for Suburb House Prices and Suburb Rentals show the historical price of houses and rental yields from 2020 to 2023, which could be useful in modelling the evolution of prices and predicting future trends (Property Data, 2021).

The dataset is quite comprehensive, but it has several limitations that need to be discussed. Some of the fields are not always populated-for example, it is not possible to disclose property price or the status of a transaction. Examples of such entries can be "PN" for a sale prior not disclosed and "SN" for sold not disclosed in the Status field that limits the accurate assessment of price trends of all transactions. Furthermore, land size and building area have some property blanks or without consistent values for such properties that might affect the analyses of property size-value (Sharifi et al., 2020, p.). All these issues were addressed in the process of cleaning the data: detecting and treating missing or inconsistent entries, imputing median values for Landsize and Building Area at times, or excluding incomplete data properties in other instances when this assumed necessity. Geographical data of latitude and longitude have also been checked to ensure that location-based analyses, in particular proximity to or from the CBD, are accurate.

Investment-Critical Insights

Market Stability Analysis

The property market in Melbourne for the period between 2021 and 2024 reflects exciting changes in prices across suburbs. This is represented using a line chart showing the fluctuations of suburb prices such as Aberfeldie, Albert Park, Armadale, and Balwyn.

For example, suburbs like Aberfeldie and Ashburton record moderate stability of price over the years, while Albert Park and Armadale record a downward trend in an attempt to reflect potential concerns about fallen property values. The Balwyn market, which had been steadily in decline, shows a surge in prices in the year 2024, likely reflecting either renewed interest or a market correction.

Figure 1 Market Stability Analysis

This can be related to greater economic indicators such as the alteration of interest rates and inflation. The general trend has been mixed concerning the market outlook, where some areas remain stable while others are experiencing large dips coupled with unexpected rebounds.

By monitoring these patterns, investors can anticipate market downturns or growth and make decisions that align with their risk tolerance and return expectations (Sharifi et al., 2020).

Location Strategy - Distance from CBD vs Price

Above is the scatter plot showing the relationship between the distance of properties from Melbourne's Central Business District and their prices. It is observable that the higher-priced properties are located closer to the CBD and most of the properties are in the lower price range within a radius of 0–5 km from the CBD. It has an extreme outlier that represents just the opposite of what is close to the CBD and still maintains a very high selling price when unique features or major developments are found in this same area.

Figure 2 Location Strategy

This tends to reflect the value investors place on proximity to key infrastructure, job markets, and amenities that the CBD provides. Nevertheless, there has often been room for some pretty sizeable differences in price in the outer suburbs due to local infrastructure projects, transport connectivity, or even gentrification. Demographic trends, such as the alleviation of young professionals toward city living and families looking for space in suburban areas, may also push these trends in pricing.

Market Fluctuations-Impact: Suburb Resilience

The above heatmap shows percentage differences in price across suburbs for Melbourne from 2021 to 2024, showing different levels of resilience from suburb to suburb, with some monocultural suburbs escaping the more turbulent ups and downs of the market. Suburbs which have grown consistently or remained steady in prices are resilient, while those that experience sharp declines in prices are sensitive to market downturns.

Figure 3 Impact of Market Fluctuations

Whereas others, among them Albert Park and Armadale, show significant swings in price, insinuating their volatility, others, such as Ashburton and Aberfeldie, insinuate patterns of resilience to market fluctuation. All this resilience is modulated, however, by several factors that include property types in each suburb, whether housing or townhouses; demand and supply dynamics; and local infrastructure development. Indeed, suburbs with diversified property types and high demand for residential space manage to maintain their prices in a stable range: This is an important insight for investors, as it underpins identifying the safer investment regions that are capable of withstanding changes in the market and yielding stable returns, even in fluctuating economic conditions.

Rental Market Analysis

Some of the major trends in rental yields across several suburbs for 2021, 2022, and 2023 are pinpointed in the rental market analysis. Among such suburbs are Balwyn, Ascot Vale, and Bentleigh, which top the list of rental yields in 2023, hence showing higher demand. They have shown consistent development from 2021 to 2023, therefore indicating increased demand due to proximity to employment hubs, educational institutions, and also areas of lifestyle amenities (Zenkteler, Foth & Hearn, 2022, p.28).

Figure 4 Rental Market Analysis

The continued growth of Ascot Vale is probably because it is strategically positioned close to the central business districts, and there is infrastructure improvement. Some of the other suburbs, such as Ashwood and Bacchus Marsh, have shown moderate increases in yield within the suburbs, hence their potential for future investment opportunities. From the consistent rise in rental yields across most suburbs, strong demand for rentals, probably underpinned by growth in population, housing affordability challenges, and lifestyle preferences, is evident. Investors are likely to be attracted by the high-growth suburbs such as Bentleigh and Balwyn for long-term investments, while emerging areas that are recording average growth may offer short-term value appreciation.

Median House Prices Analysis

In the Median House Price Analysis, different suburbs show certain trends that range from 2020 to 2023. The high-growth suburbs like Balwyn and Armadale reported high increases in median house prices. The suburb of Balwyn moved from 707.38M in the year 2020 to over 970M in 2023, showing great demand and further appreciation in the value of real estate. Similarly, Albert Park and Ascot Vale showed consistent growth from 2020 to 2023, reflecting desirability and the level at which they commanded a high value in the market (Phibbs, 2021, p.462). That places suburbs like Ashwood and Attwood in the category of moderate growth, where increases have been more gradual to indicate slower yet steady appreciation and could hence be potentially viable options for buyers seeking affordability. Overall, the trend across all suburbs indicates high-value suburbs that have retained high demand and mid-tier areas where potential for steady investment exists.

Figure 5 Median House Prices Analysis

It reflects the differential between property types, even if it is not reflected in this chart. Investors can therefore find a very good opportunity to focus on selected property segments within these high-growth areas, while investors seeking stability could look at moderately priced suburbs. This also underlines the fact that one needs to monitor variations in geography as well as property types for investment in real estate over some time (Ozogul & Tasan-Kok, 2020, p.480).

Growth Forecasting Analysis

Growth Forecasting predictively charts property prices for the future based on historical trends, indicating key suburbs in forecasting results. House prices fluctuated between 2022 and 2024, having peaked around the 2,500M mark and then decreasing into the last few months of stabilization. The chart projects possible stabilization in the forecasted projection for the years 2025 and onwards, where house prices experience moderate growth, as can also be seen in the light blue confidence interval (Kindermann, et al, p.15).

Figure 6 Growth Forecasting Analysis

This forecast also provides critical insight for the investors and stakeholders in real estate by giving them essential guidance towards informed decisions based on expected behaviour in the market. Suburbs that saw sharp rises earlier may have stabilized at this point, while suburbs belonging to the steady performance bracket continue on their path of smooth growth, hence reducing associated investment risks (?Bangura & Lee, 2021). The forecast can be further refined by narrowing it down to particular suburbs to allow targeted predictions for high-demand areas.

Understanding these projected trends helps inform the planning of future housing investments and coordinate strategies with likely market conditions and potential opportunities for capitalizing on growth.

Figure 7 Dashboard 1

Figure 8 Dashboard 2

Figure 9 Dashboard 3

Investor Recommendations

The following recommendations can be actionable keeping in view the elaborate analysis of the property market in Melbourne between 2021 and 2024, guiding investors toward high-potential opportunities while minimizing risks.

Target High-Growth Suburbs: Suburbs like Balwyn, Armadale, and Albert Park show very strong demand and big price growth, thus, they are suitable for long-term capital gain. Take Balwyn, for instance, whose median house price rose from 707.38M to over 970M between 2020 and 2023, showing its continued upward trajectory. They are desirable suburbs in which to invest for high returns, due to their desirability combined with proximity to major infrastructure and lifestyle amenities.

Yields Obtained Werden: Suburbs such as Bentleigh, Balwyn, and Ascot Vale are leading in the rental market this 2023, along with their high yields. With these areas come potential opportunities for investors in their steady rental incomes. Even more attractive is the prospect of strong growth that Ascot Vale shows grounded by its proximity to employment hubs and recently upgraded infrastructure. For Bentleigh, increased yields show persistent demand for renewed long-term returns (?Bangura & Lee, 2021).

Observe market fluctuations: Hotspot analysis points out that some suburbs, such as Albert Park and Armadale, are highly volatile and tend to fluctuate significantly in price. While they offer higher returns, they bear greater risks, which any investor should strictly monitor and time in the market for better purchasing at low prices or to avoid downturns. Further, Aberfeldie and Ashburton suburbs, with their price stability, will be a safer investment during turbulent markets (Phibbs, 2021, p.467).

Long-term Risks: The long-term risks include market fluctuations and wide factors that relate to changes in interest rates. Investors should diversify their portfolio between high-growth and stable suburbs, balancing possible returns against the risk. This will also be of great advantage if the investor follows economic indicators such as inflation and interest rates to know how and when to change investment strategies (Fabozzi, Shiller & Tunaru, 2020, p.132).

Leverage proximity to the CBD for a premium: The properties closer to the Melbourne CBD command a premium price owing to proximity and value from being closer to infrastructure and job markets. However, investors should also explore the outer suburbs with strong local infrastructure and transport connectivity since these can be more value-for-money and may offer a good future growth potential due to gentrification or demographic shifts (Hunter, et al., 2022, p.701). The emerging suburbs present opportunities, as most suburbs have emerging rental demand and moderate growth. However, areas such as Bacchus Marsh and Ashwood present opportunities to take advantage of future appreciation.

Conclusion

The analysis of Melbourne's property market and the details of making data-driven decisions on real estate investment cannot be ignored. It would be easy for an investor to pinpoint suburbs with high growth, hotspots for rental yield, and resilient areas to maintain a proper investment strategy that goes in tandem with market trends. Minimizing risk against potential return will be the battle cry for long-term investment success, especially in such a volatile market and economic changes. The analysis hereby derived shows valuable guidance for decision-making in the dynamic, ever-evolving market.

References

Bangura, M., & Lee, C. L. (2019). House price diffusion of housing submarkets in Greater Sydney. Housing Studies, 35(6), 1110–1141. https://doi.org/10.1080/02673037.2019.1648772

?Grau, U., & Fernandez-Abascal, G. (2019). Melbourne, Sydney; References, Reflections and Remarks. Uts.edu.au. http://hdl.handle.net/10453/133486

Palm, M. (2021). Examining building age, rental housing and price filtering for affordability in Melbourne, Australia - Matthew Palm, Katrina Eve Raynor, Georgia Warren-Myers, 2021. Urban Studies. https://journals.sagepub.com/doi/abs/10.1177/0042098020927839

?Phibbs, P. (2021). The role and significance of planning in the determination of house prices in Australia: Recent policy debates - Peter Phibbs, Nicole Gurran, 2021. Environment and Planning A: Economy and Space. 457-479. https://journals.sagepub.com/doi/full/10.1177/0308518X21988942

Property data. (2021). Vic.gov.au. https://www.consumer.vic.gov.au/housing/buying-and-selling-property/property-data

Sharifi, F., Nygaard, A., Stone, W. M., & Levin, I. (2020). Accessing green space in Melbourne: Measuring inequity and household mobility. Landscape and Urban Planning, 207, 104004–104004. https://doi.org/10.1016/j.landurbplan.2020.104004

Özogul, S., & Tasan-Kok, T. (2020). One and the same? A systematic literature review of residential property investor types. Journal of Planning Literature, 35(4), 475-494.https://journals.sagepub.com/doi/pdf/10.1177/0885412220944919

Fabozzi, F. J., Shiller, R. J., & Tunaru, R. S. (2020). A 30-year perspective on property derivatives: what can be done to tame property price risk?. Journal of Economic Perspectives, 34(4), 121-145.https://pubs.aeaweb.org/doi/pdf/10.1257/jep.34.4.121 ?

Hunter, R. F., Dallat, M. A., Tully, M. A., Heron, L., O’Neill, C., & Kee, F. (2022). Social return on investment analysis of an urban greenway. Cities & health, 6(4), 693-710.https://www.tandfonline.com/doi/pdf/10.1080/23748834.2020.1766783

Zenkteler, M., Foth, M., & Hearn, G. (2022). Lifestyle cities, remote work and implications for urban planning. Australian Planner, 58(1-2), 25-35. https://eprints.qut.edu.au/232902/1/Paper_4_accepted_v9mf.pdf

Kindermann, F., Le Blanc, J., Piazzesi, M., & Schneider, M. (2021). Learning about housing cost: Survey evidence from the german house price boom (No. w28895). National Bureau of Economic Research. 1-78. https://www.nber.org/system/files/working_papers/w28895/w28895.pdf