Property Investment Update

Melbourne is a city that offers investors so many amazing options across a wide range of suburbs, all with their own appeal and unique charm. From sleek inner city apartments to inviting family residences and easy units in quiet and picturesque suburbs. There are plenty of opportunities to get into the investing market and there is no better time than this spring!

Melbourne’s rental market remains robust
While the Melbourne sales market may have been going through a little bit of a flat patch over the last couple of years, the rental market continues to thrive for investors who are after exceptional returns. Record low vacancy rates and high demand have driven this.

There are some suburbs in Melbourne that have seen a jump of up to 34% increase in median rent over the last 12 months. Bellfield in Melbourne’s north-east was at the top of the list, seeing it’s median rental price jump over a third in the last year to $643 per week. Prestige blue-chip suburbs Toorak and East Melbourne were next on the list with rises of 30% and 29.4% respectively.

Heidelberg West, Donvale, Noble Park North, Maribyrnong, Murrumbeena, Keilor East, and Dandenong were also on the list, all with median rental increases of over 20%. While continued high rents spell bad news for renters, these figures do bode well for investors who are wanting to maximise the return on their investment.

Invest now in Melbourne’s booming ‘Activity Centres’
To help with the current housing crisis, The Victorian Government recently highlighted 10 activity centres throughout Melbourne where 800,000 new homes will be built over the next decade. The goal is to help younger people and current renters in these areas be able to purchase more affordable housing.

Moorabbin in Melbourne’s south-east was one of the activity centres chosen, with the hub itself including Kingston Arts Centre, City Hall, bustling shops, and Moorabbin Train Station. “It’s a vibrant area – we’ve got the beach, schools, parks, and an airport that trains 30 per cent of Australia’s pilots,’ said Kingston mayor Jenna Davey-Burns to Domain. “We’re seeing northside culture coming south, and that’s what people have been waiting for. Young families and people are moving into the area because there’s so much on offer.”

Other emerging activity centres chosen by the government include Frankson, Camberwell Junction, Chadstone, Broadmeadows, Epping, Niddrie, North Essendon, Preston and Ringwood. With these suburbs set to explode in popularity over the coming years with the implementation of all this new housing, it couldn’t be a better time to invest in these areas.

The tide may be turning
An article in the Australian Financial Review recently highlighted that investor demand is currently outstripping supply at the very moment across Australia. With interest rate cuts imminently on the horizon, investors are looking to seeing a boost in their capital gains and a drop in holding costs. Highlighting this robustness in the property investing market nationwide, the volume of investor-led loans was $11.71 billion in August throughout Australia, the 2nd highest on record.

“A reduction in interest rates might empower more investors to actually hold their properties off the market because you’d have to imagine their properties would become more serviceable,” said Eliza Owen, Head of Research at CoreLogic to the AFR. “At the moment demand for investment properties seemed to be outstripping those who were selling off, at least on a combined capital basis.”

Melbourne hasn’t quite followed the trend of the rest of Australia when it comes to investor demand, but the tide is definitely turning giving savvy buyers a chance to snap up a bargain. So where to buy your next investment? Melbourne’s west saw 420 ex-rental houses hitting the market between January and September 2024, which was a jump of 57.1% above the five-year average. Melbourne’s inner-city, north-east, and north-west also climbed 43.1% on ex-rental listings in the same time. These areas might be a great place to start, with plenty of buying options awaiting keen investors.