August 31, 2018 | 6 of the best suburbs for property investment in Melbourne
Over the past decade, Melbourne has proven to be one of the best cities in Australia for property investment. Population growth has been a large contributing factor with hundreds of thousands flocking to the city each year. This doesn’t look to be slowing down with Melbourne being home to some of the best suburbs in Australia, having one of the world’s most comprehensive tram networks and consistently securing the top spot as the world’s most liveable city.
According to research by CoreLogic, Melbourne is one of the ten fastest growing cities in the developed world. Melbourne has just reached a population milestone of 5,000,000 people and this is likely to increase by another 10% over the next four years. This increase in population means more demand for property and rentals and presents great opportunity for property investors.
The media is currently portraying doom and gloom for Australia’s property market. Melbourne was even dubbed as the “weakest housing market in the country” after property prices fell 1.8% in the second quarter of 2018 (according to research by CoreLogic data). However, year on year, Melbourne property has shown unbelievable signs of growth and over the past thirty years, house prices have increased on average by 7.25% per year.
Currently in Melbourne, the median house price is $840,000, the median rental price is $440 per week and the average yields are 2.8% gross per annum (according to figures by the REIV in July 2018). In the past five years, the city has experienced a 55% increase in house prices. This is great news for both owner-occupiers and property investors. We believe a positive trend is set to continue into the future as our population boom continues.
We have all heard stories about people who were “lucky” enough to have bought a property at just the right time, in just the right location and sold for an amazing profit. However, any property expert will tell you that creating wealth from bricks and mortar is rarely about luck. It’s about purchasing an A-Grade property in a fantastic location for the correct price.
When looking for quality investment properties that will benefit from strong capital growth and also entice the best tenants, you need to consider a number of different elements:
- Quality dwelling
- Location
- streetscape
- proximity to public transport
- proximity to local amenities
- schools
- major infrastructure projects planned in the area
- capital growth
- rental demand in the area and yields
You also need to decide exactly what you want to achieve from your investment property such as long-term capital growth or higher rental yield. Understanding these statistics at a suburb level is key as you can quickly see which suburbs are out performing the market average
Beckett Property has done the work to identify some of the best investment suburbs in Melbourne. Keep reading to find out which suburbs and dwelling classes are topping our list of favourites in 2018. We have been buying properties in these suburbs as they provide great scarcity, high demand, high capital growth rates and some of the best possible rental yields for property investors.
Property Investment Budget – $600,000 to $800,000
Ardeer – free standing house with 550 sq mt land plus
Ardeer is located 15 km west of the CBD in the city of Brimbank. Bound by the Western Highway in the north and the Western Ring Road in the west, Ardeer is a mixed-use suburb traversed by Kororoit Creek. Ardeer features a number of open spaces including the Sunshine Golf Course, More Park and the Ainsworth Reserve. The majority of local amenities are situated in the very close neighbouring suburb of Sunshine.
- REIV Median house price 2018: $687,000
- REIV Median house price 2016: $455,000
- Total growth over 2 years: 50.99%
Reservoir – 2/3 bedroom villa unit
Reservoir is located 12 km north of the CBD in the city of Darebin. Bound by Merri Creek in the west and Darebin Creek in the east, Reservoir is a fast gentrifying suburb in popular demand. It has significant residential and industrial areas accompanied by a commercial focus around the railway station and along Broadway shopping centre. Reservoir also features a Private Hospital and Edwardes Lake Park.
- REIV Median unit price 2018: $578,000
- REIV Median unit price 2016: $425,000
- Total growth over 2 years: 36.00%
Property Investment Budget – $800,000 to $1,000,000
Glenroy – free standing house with 550 sq mt land plus
Glenroy is located 13 km north of the CBD in the city of Moreland. It’s a large suburb and principally residential. Glenroy also features a heavy commercial district centred on the railway station and Northern Memorial Park. Much of the population is employed in manufacturing, wholesale and retail trade sectors.
- REIV Median house price 2018: $762,000
- REIV Median house price 2016: $587,000
- Total growth over 2 years: 29.81%
Carrum – free standing house with 550 sq mt land plus
Carrum is located 32 km south-east of the CBD in the city of Kingston. It is a small residential suburb located on Port Phillip Bay and has a commercial presence around the railway station and shopping centre. The population has a large component of families over the age of sixty who have capitalised on the fast-changing landscape and some of the best beaches Melbourne has to offer.
- REIV Median house price 2018: $985,000
- REIV Median house price 2016: $683,000
- Total growth over 2 years: 40.22%
Property Investment Budget – $1,000,000 – $1,200,000
Mentone – free standing house with 550 sq mt land plus
Mentone is located 21 km south-east of the CBD in the city of Kingston. This wonderful suburb features significant residential and commercial zones mainly centred around the railway station. Like a number of suburbs in this region of Melbourne, it is comprised by mainly one and two person households.
- REIV Median house price 2018: $1,200,000
- REIV Median house price 2016: $935,000
- Total growth over 2 years: 28.34%
Mitcham – free standing house with 550 sq mt land plus
Mitcham is located 20 km east of the CBD in the city of Whitehorse. It is centred between Mitcham and Whitehorse Roads, primarily residential with some industrial presence and the commercial focus centred around the railway station. Mitcham features a number of parks such as Halliday Park, Simpsons Park, Heatherdale Reserve, Antonio Park and more along the Mullum Mullum Creek.
- REIV Median house price 2018: $1,000,000
- REIV Median house price 2016: $868,000
- Total growth over 2 years: 15.21%
The Outlook
Through the second half of 2018 and into 2019, the biggest influence on the property investment market will be the growing population of Melbourne which is now in excess of 140,000 people per year (according to the ABS). As the population increases, so does the rental market and as such, investment properties will increase in demand. If house price growth slows down preceding the enormous growth achieved since 2013, rental prices can expect to increase which is great news for investors.
If you are looking to invest in Melbourne property, now is the ideal time to buy and the suburbs we have mentioned above are worth looking into. All of the above information should be used in conjunction with your own market research. If you require further assistance, please contact one of our Buyers Advocates for a free consultation to discuss your property requirements.
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