Investing in property is one of the most popular ways to build wealth in Australia, and both Melbourne and Perth offer lucrative opportunities for property investors.
With their diverse range of suburbs, these two cities are ripe for investment, offering a mix of high-growth areas, emerging suburbs, and affordable options for those looking to diversify their portfolios. Whether you seek strong capital growth, reliable rental yield, or affordability with potential, Melbourne and Perth have it all.
This article will explore Melbourne and Perth’s most promising suburbs for investment. We will break them down into key categories: established suburbs with strong growth, high-growth areas, emerging suburbs, and affordable options.
Let’s Get Straight To The Point
Investing in Melbourne and Perth property offers diverse opportunities, including established suburbs with strong growth, high-growth areas, and affordable options. In Melbourne, promising suburbs include Caulfield, Blackburn South, and Bentleigh for established growth; Tyabb and Middle Park for high growth; and Reservoir and Sunshine West for affordability.
Perth features high-growth suburbs like Golden Bay and Mindarie, emerging areas like Ellenbrook and Byford, premium locations like Swanbourne and West Leederville, and affordable options like Victoria Park and Withers. Investors should consider capital growth, rental yields, and infrastructure developments to make informed decisions.
Melbourne’s Most Promising Investment Suburbs
1. Established Suburbs With Strong Growth
Melbourne’s established suburbs continue to deliver solid returns, making them attractive options for property investors.
These areas boast quality infrastructure, well-developed amenities, and proximity to the city, making them ideal for long-term investment.
Caulfield: Located just 10km southeast of Melbourne’s Central Business District (CBD), Caulfield is an established suburb that has attracted homeowners and investors for years.
With a median house price of $1.85 million, Caulfield offers excellent proximity to the city and well-established infrastructure.
Investors are drawn to this suburb because of its access to prestigious schools, parks, public transport options, and vibrant shopping districts, making it appealing to families and professionals alike.
Blackburn South: Blackburn South is part of the eastern suburbs of Melbourne and is known for its family-friendly atmosphere, great schools, and leafy surroundings.
The suburb has a median house price of $1.355 million and is an excellent option for those looking to balance affordable prices and strong growth potential. Parks, retail establishments, and good public transportation connections draw young professionals and families seeking a more sedate suburban living near the central business district.
Bentleigh and East Bentleigh: These neighbouring suburbs in Melbourne’s south-east offer diverse property types, excellent transport links, and strong rental demand. The median house price in Bentleigh is around $1.375 million, while East Bentleigh comes in at around $1.350 million.
Both suburbs have grown strongly, underpinned by local amenities such as shopping centres, parks, and highly rated schools. These suburbs attract investors looking for properties with good rental yields and solid capital growth prospects.
2. High-Growth Areas
Melbourne’s high-growth suburbs are attracting investors looking to capitalise on rapidly appreciating property values.
These areas are experiencing significant increases in median house prices and rental yields, driven by infrastructure developments, population growth, and urban expansion.
Tyabb: Situated in the Mornington Peninsula, Tyabb has become a popular high-growth area. The median house price has grown 26.3% to $960,000.
Its proximity to the coast, expanding amenities, and quiet, rural lifestyle make Tyabb appealing to families and investors alike. The suburb’s solid growth rate indicates it will remain an attractive investment option.
Middle Park: With an 18.5% growth in house prices, Middle Park is one of the most sought-after suburbs in Melbourne.
The median house price has now reached $2.85 million, driven by the suburb’s prestigious location near the bay, high-end properties, and easy access to the CBD.
The combination of growth, lifestyle appeal, and proximity to the beach makes Middle Park an ideal choice for premium investors.
Hawthorn East: Another high-growth suburb, Hawthorn East, has seen a remarkable 18.5% price increase, with the median house price now at $2.63 million.
Known for its well-established tree-lined streets, close-knit community, and proximity to educational institutions, Hawthorn East is popular among young professionals and families looking for convenience and lifestyle.
With a mix of traditional homes and modern apartments, the suburb attracts many buyers, further pushing its growth.
3. Affordable Options With Potential
For investors on a budget or those seeking more affordable entry points into Melbourne’s property market, several suburbs offer strong growth potential despite their relatively lower price points.
Reservoir: Located in Melbourne’s northern suburbs, Reservoir offers affordable properties, with many houses priced under $500,000.
With substantial infrastructure development and a growing community, Reservoir is gaining popularity among first-time buyers and investors looking for growth potential in an affordable suburb.
Sunshine West: Sunshine West is another suburb in Melbourne’s western region that presents opportunities for growth and strong rental yields.
The median house price remains under $500,000, making it an affordable option for investors seeking future capital appreciation. With planned infrastructure developments and a steadily growing population, Sunshine West is expected to be a strong performer in the coming years.
Mernda, South Morang: Mernda and South Morang have long been considered undervalued suburbs with significant potential for property price increases.
Both areas have witnessed steady growth, and with new transport projects such as the Mernda Rail Extension, these areas are expected to continue thriving. Investors looking for suburbs under the $500,000 price point should consider these areas for long-term investment strategies.
Perth’s Most Promising Investment Suburbs
While Perth’s property market is more affordable than Melbourne’s, the city still offers plenty of promising investment suburbs, ranging from high-growth areas to emerging suburbs and affordable options with solid rental yields.
1. High Growth Areas
Perth’s property market has rebounded strongly in recent years, with many areas experiencing consistent growth in house prices and rental yields. Investors can look to these suburbs for high returns and strong capital appreciation.
Golden Bay: Golden Bay, located 50km south of Perth, has a median house price of $430,000 and boasts a 14.6% annual growth rate. The suburb is experiencing a surge in demand, partly due to its affordable price point and attractive rental yields (6.9%).
Golden Bay’s proximity to the coast and new infrastructure developments make it attractive to first-time buyers and investors.
Mindarie: Mindarie has recorded a 9.0% annual increase in median house prices, reaching $925,000.
Known for its coastal charm, high-end properties, and easy access to Perth CBD and local amenities, Mindarie is a top-performing suburb for investors looking for solid growth in a premium location.
2. Emerging Suburbs
Emerging suburbs in Perth are gaining traction thanks to rapid growth, infrastructure development, and increasing demand for housing. These areas present opportunities for investors to enter the market before prices increase significantly.
Ellenbrook: Ellenbrook has been one of Perth’s standout suburbs, with a 24% growth rate in 2023. The suburb offers affordable housing options with strong growth prospects, thanks to ongoing infrastructure improvements, including the construction of the Ellenbrook Train Line.
This suburb is ideal for investors looking for affordable properties with substantial long-term capital growth potential.
Byford: Byford’s 26% annual growth rate and median house price of $605,000 make it a standout performer in Perth’s property market. Byford is poised for continued growth with new infrastructure projects and expanding amenities.
The suburb appeals to families, young professionals, and investors looking to secure a property in one of Perth’s fastest-growing areas.
Baldivis: Baldivis is another emerging suburb in Perth, with a 23% growth rate and a median house price of $611,000.
Due to its proximity to schools, parks, and shopping centres, Baldivis is particularly attractive to families and young professionals. As infrastructure improves in the coming years, the suburb will experience even more growth.
3. Premium Suburbs
For investors seeking high-end properties with significant capital appreciation potential, Perth has several premium suburbs with strong market performance.
Swanbourne: Swanbourne is one of Perth’s most prestigious suburbs, with a median house price of $2.325 million.
The suburb offers excellent rental growth (66.3%), making it highly appealing to investors looking for high-end properties near Perth’s best beaches, schools, and local amenities. Swanbourne is ideal for investors seeking a premium location with a proven track record of solid returns.
West Leederville: West Leederville, located just 3km from Perth’s city centre, has a median house price of $1.4 million, with a 25.5% increase in rent prices.
The suburb is known for its vibrant community access to cafes, parks, and public transport. With solid growth prospects and proximity to Perth’s CBD, West Leederville remains a top choice for investors.
4. Affordable Options With Growth Potential
Numerous cheap neighbourhoods have great growth potential for those hoping to enter the Perth real estate market without breaking the bank.
Victoria Park: With a median house price of $870,000, Victoria Park offers good rental growth (7.4%) and a rental yield of 4.5%.
The suburb’s proximity to the city and ongoing development make it an appealing alternative for investors wishing to capitalise on Perth’s expanding real estate market.
Withers: Withers has been one of Perth’s most affordable suburbs, with a median house price of just $390,000 and a 30% annual capital growth rate.
The suburb offers excellent potential for future growth, particularly as the area’s infrastructure and local amenities improve.
Conclusion
When considering property investment in Melbourne or Perth, investors should focus on areas that offer a combination of strong capital growth, high rental yields, and access to quality amenities. Melbourne offers established suburbs like Caulfield, Blackburn South, and Bentleigh while presenting high-growth areas like Tyabb and Middle Park.
On the other hand, Perth presents opportunities in emerging suburbs like Ellenbrook and Byford and premium areas like Swanbourne and West Leederville. Investors should also consider infrastructure developments, population growth trends, and each suburb’s long-term potential.
Conducting thorough research into these factors will help ensure informed decisions that maximise investment returns in Melbourne and Perth’s evolving property markets.
Frequently Asked Questions
What Makes A Suburb A Promising Area For Investment?
A promising suburb typically features strong infrastructure, proximity to schools, shops, and public transport, high demand for rental properties, and potential for future capital growth.
What Factors Should I Consider Before Investing In A Suburb?
Key factors include:
- Median property prices.
- Historical growth trends.
- Rental yield potential.
- Proximity to amenities, schools, and transport.
- Planned government infrastructure developments
How Does Government Infrastructure Impact Property Investment?
New infrastructure projects like train stations, schools, and shopping centres significantly increase a suburb’s desirability, often driving up property demand and values.
Are Outer Suburbs Better For Investment Than Inner Suburbs?
Outer suburbs often offer more affordable entry points and higher rental yields, making them attractive to investors. However, inner suburbs provide long-term capital growth due to their proximity to the CBD.
What Risks Should I Be Aware Of When Investing In These Suburbs?
Potential risks include market fluctuations, oversupply of housing, and changes in interest rates. It’s also essential to consider vacancy rates and the local economic climate.