Melbourne Property Investment Update
Some of the most affordable suburbs Melbourne has to offer hold great opportunities for property investment. Rapid growth rates, accessible entry prices and good rental returns mean there is such a thing as high performing, affordable suburbs - perfect for a savvy investor or start up portfolio!
From student hot-spots to family-friendly nooks, if you’re trying to figure out where to invest in Melbourne we have you covered with our list.
SOUTHBANK
Southbank is Melbourne’s premier cultural destination. In Southbank, you will find the National Gallery of Victoria, Melbourne Recital Centre, Arts Centre Melbourne, the Australian Centre for Contemporary Art, and more. It’s also home to some of the city’s finest restaurants, and the mecca that is Crown Melbourne.
Melbourne’s inner city core has a population of around 29,450 people, a figure that is expected to double to 59,900 over the next 20 years.
As a result, there is much more property development activity in Melbourne CBD than anywhere else in the larger metropolitan area, with the majority of these developments comprising of high-density high-rise apartment buildings.
The area of Southbank, just south of Melbourne’s CBD, currently boasts over 9,000 distinct dwellings, the majority of which are family households (45%).
The number of residential properties is set to rise to more than 26,000 over the next 20 years.
Southbank remains favored by many residents, including renters.
The average vacancy rate fell from 11.4% in July 2017 to 9.8% after 12 months, suggesting that the $550 average weekly rent rate is not affecting tenant demand. Moreover, investors enjoy considerable yields of 5.2% on average. The cash flow gained suggests that investments here could pay off very well and that the stock on the market can be effectively filled.
This inner-city Melbourne suburb has experienced a strong inflow of high-rise apartments, given that it’s one of the city’s most populated areas. Southbank is regarded as one of Greater Melbourne’s main business hubs and is home to many major firms. Southbank is served by a shopping precinct on the river that is also home to Southgate Restaurant.
BURWOOD
Good public transport access, better bang for your buck.
Brick veneer was all the rage when Burwood was carved up during the 1950s for a new generation of middle-class Australians.
Change has come to Burwood’s doorstep, as long-time residents sell up and new townhouse and apartment developments spring up to meet growing demand. Moving in is a younger, more international demographic, looking to take advantage of the good public transport access, the green of Wattle Park and Gardiners Creek reserve, better bang for your buck compared to some of its older, leafier neighbours and, most importantly, the high-quality education offered by Deakin University and Presbyterian Ladies’ College.
Burwood has a population of 15,027 with an average age of between 20 and 39 years - 33.72% of its occupants live in rental accommodation.
The median listing price for houses is $1,165,000, and this has changed -6.80% over the past year and changed 20.10% over 2 years.
The median rent in Burwood for houses is $495 per week, and the median rental yield is 2.20%. Stock on the market for houses/townhouses has changed 1.45% compared to last year and the average time to sell a house/townhouse is 113 days. The median listing price for units is $489,500, and this has changed 0.92% over the past year. The average unit takes 342 days to sell, and the median rent for a unit in Burwood is $380 per week, producing a rental yield of 4.03%.
GLENROY
Located in Melbourne’s northwest, 13 kilometers from the CBD, Glenroy is an up-and-coming suburb that has grown in popularity over the years. This is due to an increase in medium-density developments favored by first-home buyers and young couples, residential amenities in the area, as well as its proximity to the CBD.
Glenroy is a suburb in the Moreland Region of Victoria with a population of 22,245 people, and 31.42% of its occupants live in rental accommodation. The median listing price for houses is $630,000, and this has changed -10.00% over the past year and changed 5.00% over 2 years.
The median rent in Glenroy for houses is $400 per week, and the median rental yield is 3.30%. Stock on the market for houses/townhouses has changed 48.78% compared to last year and the average time to sell a house/townhouse is 108 days. The median listing price for units is $450,000, and this has changed 0.22% over the past year. The average unit takes 95 days to sell, and the median rent for a unit in Glenroy is $360 per week, producing a rental yield of 4.16%.
With a capital gain of -12.16% for the last 12 months, Glenroy, 3046 has performed for property investments than its average annual 6.02% property growth over the last 5 years.
Data for the last quarter indicates that in the short term at least, the capital value growth rate for property investors in Glenroy has increased when compared to the 5-year average annual rate.
ROWVILLE
Situated less than 30kms south-east of the city, Rowville is a very family-oriented suburb centered around new estates of spacious homes. There are several shopping pockets in the area, lush parks and golf courses and plenty of schools. It’s not far from Westfield Knox for major shopping or the Dandenongs for major getaway landscape.
Rowville, in the south-east, is perfectly suited to family life. Homes are expansive, set on new housing estates with large gardens, and there are plenty of schools in the area. There’s a pleasing sense of greenery with Rowville’s parks and golf courses, as well as a myriad of shopping options and easy access to the Monash Freeway.
Rowville, in the city’s south-east, is a family-friendly suburb that’s enjoying a growth spurt of its own. Having boomed in the last few decades, homes are decidedly contemporary here, with a focus on multiple bedrooms and expansive gardens.
Rowville’s range of expansive homes makes it a very popular landing spot for families of all ages – you’ll find many established families and couples calling Rowville home.
It offers an easy blend of outdoor activities, a broad range of shopping alternatives, from malls to market, and a suite of schools for the kids.
Contemporary, low maintenance family living with room to move is the main feature of Rowville, but there are some snappy new apartments starting to make a splash too.
Rowville has 43 properties available for rent and 55 properties for sale. Median property prices over the last year range from $810,000 for houses to $550,000 for units. If you are looking for an investment property, consider houses in Rowville rent out for $450 PW with an annual rental yield of 2.9% and units rent for $400 PW with a rental yield of 3.8%. Based on five years of sales, Rowville has seen a compound growth rate of 6.3% for houses and 8.8% for units.
CARLTON
Carlton, on the city’s northern edge, is a cultured, bookish hub encompassing Melbourne University, Carlton Gardens and the long-established Little Italy of Lygon Street.
Carlton has a lovely, literary feel, with locals and university students milling in Readings Bookstore, drinking coffee at Brunetti or queuing to see the latest independent movie at the Nova. Lygon Street is the heart and Italian soul of this suburb which is a mere stroll to the city from its terraced streets.
Student life is a key component of Carlton where you’ll find lively sharehouses alongside the tended homes of long-time Italian locals and those who love to be able to walk through gorgeous public gardens to get to the city for work.
Carlton is not only the perfect stop for students but ideal for independent people who love the creature comforts of the inner city too.
With its European heritage and cultured atmosphere, the buzz of university life and an enviable city side location, Carlton knows how to put the ‘style’ into ‘lifestyle.’
Historic homes, double-story Victorian terraces around central gardens and impressive exhibition buildings capture the heritage of Carlton, while innovative apartment living captures the future.
Carlton’s median property prices over the last year range from $1,310,000 for houses to $347,000 for units. If you are looking for an investment property, consider houses in Carlton rent out for $700 PW with an annual rental yield of 2.8% and units rent for $473 PW with a rental yield of 7.1%. Based on five years of sales, Carlton has seen a compound growth rate of 5.5% for houses and -5.9% for units.
Carlton sits just a couple of kilometers north of the CBD, yet it's the unit price. It is astonishingly affordable. In fact, it was recently singled out by RP Data and St George bank as an affordable growth pocket that’s been overlooked compared to its neighbors.
Certainly, the median unit prices for neighboring Fitzroy, Collingwood and North Melbourne suggest that Carlton has plenty of room for growth. It’s worth bearing in mind, however, that Carlton’s unit listings show a bias towards small student studios and one-bedroom units, so when comparing like for like Carlton units won’t be quite as cheap as the median data suggests.
That said, the entry price for student studios that bring in $200 per week in rent is as little as $139,000. And with the suburb’s average yield coming in at around 7% this is an area where it’s possible to pick up a cheap, low maintenance apartment and play for rental returns.
Other than students, the rental market is made up primarily of young families and professionals, with renters making up an astonishing 79% of Carlton’s population at the last Census in 2006. This figure is expected to hold firm over the next five years by SQM Research. The rental vacancy rate sits at around the 2% mark.
The location is excellent, with the CBD, two universities and all the amenities that you can shake a stick at all being within a couple of kilometers. These include restaurants, cafes, bookstores, and a cinema complex. Carlton is especially well known for its thriving Italian community and is credited with kicking off Melbourne’s café culture.
KILSYTH
Named for a Scottish town, the suburb of Kilsyth is enjoying booming population growth, Kilsyth is a suburb in the Yarra Ranges region of Victoria. Kilsyth has a population of 10,891 people and 18.16% of its occupants live in rental accommodation.
Units are spending only around 30 days on the market – a strong sign of high demand from buyers. Such properties are also selling at low discount rates.
KILSYTH ranks 403rd in Victoria when it comes to estimated capital gains experienced by property investors over the past three years.
Also, in KILSYTH, the median home price is sitting at $681,077, and the average rent at $410, this suggests property owners could potentially earn a 3.13% increase in gross rental yield.
Property investors have seen a -2.7% drop in KILSYTH based on a decrease in median home prices for the past three months.
A survey of average capital gains or median home price increase in suburbs across the country shows that this suburb obtained a 7.21% growth over ten years.
PRESTON
Preston is a lively mix of old-school locals buying produce at Preston Market and new-school locals soaking up the arts, cafes and multicultural vibes.
Less than 10kms north of the city, you’ll find Preston, with its lovely, multicultural mix of families and singles and its blend of new and old. It’s got a gorgeous old-school market, plenty of schools and a good community arts scene – plus it’s right next door to cafe-stylish Thornbury.
Preston is a well-established suburb, so you’ll find a lot of older families here who enjoy the space and sizable homes, but it’s also sought after for young independent people for its subtle groove and proximity to hip enclaves like Thornbury and Northcote.
You’ll find a comfortable mix of families and singles in Preston, thanks to its space and community atmosphere plus its proximity to the city.
Preston has a vibrant atmosphere and a multicultural flavor. Get amongst the long-term locals for your fresh produce at the bustling Preston market, then stop for chimney cake at the Hungarian Chimney van. High Street has a burgeoning cafe scene amidst its delis, while Northland is your go-to mall. There’s also a thriving community arts scene, so mark Darebin Music Feast on your calendar.
Life in Preston has a palpable sense of community with its lively, multicultural mix of new cafes and old school markets, arts festivals and strip shopping.
Preston features a range of possible homes, from large, period houses to more modest homes built a little later and flash new apartments arriving on the scene.
Preston has some impressive public buildings, but you can also see the suburb’s past in quiet streets featuring clinker brick Art Deco houses and immaculate weatherboard Californians. You’ll also find roomy family homes built a little later, as well as units and townhouses for downsizers.
With its location and lifestyle, a growing number of designer apartments and warehouse conversions are adding their flare to Preston.
Preston is a vibrant, spirited suburb just north of the city, with plenty of schools and public transport as well as a thriving community arts scene. Whether you’re looking for a period home or a modern apartment, a produce market or a hip cafe, Preston can dial it up to suit your style.
Based on its average 5-year and quarterly capital gains, the suburb saw average growth in the long term.
Preston has a population of 32,851 people and 34.51% of its occupants live in rental accommodation. The median listing price for houses is $900,000, and this has changed -3.75% over the past year and changed 23.28% over 2 years.
The suburb also delivered a stronger performance in contrast to other Australian suburbs in terms of appreciation of property value. Investors saw the median home price rise to $960,000.
The median rent in Preston for houses is $490 per week, and the median rental yield is 2.83%. Stock on the market for houses/townhouses has changed 23.76% compared to last year and the average time to sell a house/townhouse is 109 days. The median listing price for units is $439,000, and this has changed 4.52% over the past year. The average unit takes 141 days to sell, and the median rent for a unit in Preston is $385 per week, producing a rental yield of 4.56%.
Average weekly rents on listings have reached the $490 mark, reflecting a 2.65% increase in returns based on the current median price in PRESTON.
An average of 23.67 real estate transactions takes place per month in PRESTON, which translates to 284 per annum.
284 properties were sold in PRESTON in 2016, making it the 340th most active market in VIC based on total real estate transactions.
PRESTON, 3072 places 437th in Australia based on median property value growth during the quarter.
