- Victoria was the only state to record a decline in population during 2021, thanks to the extended lockdowns
- Investors have enjoyed strong returns over the past decade, albeit lower return than Sydney
- A leading buyers agency has revealed the top 20 house and unit markets in Melbourne for investors
Leading buyers agency BuyersBuyers noted that Victoria is the state most impacted by the lockdown restrictions since the pandemic began, and also the only state that recorded a declining population in 2021.
Due to strong immigration, Melbourne recorded the strongest population growth in the nation prior to the pandemic, which is excepted to continue next year. Over the coming decade Melbourne is expected to once gain become the largest city in Australia., overtaking Sydney.
Weekly asking property prices have increased during this time.
Greater Melbourne
So what has happened to property investors, and what is likely to occur?
During this time, investors have enjoyed strong returns. Houses have outperformed units over the past decade, although family-suitable apartments in small unit blocks in popular areas have delivered strong capital growth and healthy rental returns to investors.
Although the Victorian housing market was severely impacted by the extended lockdown in 2020 and 2021, it has rebounded sharply. The median house price hit a new record thanks to a 16% rise over 2021.
While capital growth has been lower than Sydney in recent year, it is more affordable. Free-standing houses with good access to the CBD can still be purchased for well below the $1 million mark.
Houses prices have been declining and are excepted to continue to do so this year, due to interest rate rises. Demand for units has been a bit softer, especially in the CBD and on the CBD fringe.
Houses in Greater Melbourne and the regional areas with close access to the capital city are also enjoying robust demand, thanks to relative housing affordability and still relatively low interest rates.
Doron Peleg of BuyersBuyers noted that there is evidence of a two-speed market developing in Melbourne over the past decade, with land values pushing the prices of detached housing higher. Units, on the other hand, have only recorded modest capital growth.
“Demand for unit rentals dropped through the pandemic with the absence of international students, tourists, and new migrants from overseas,” he said.
“As a result, there was an overhang of units, and rents declined significantly for inner-city units in 2020 and 2021.”
“It was logistically challenging to buy during Melbourne’s extended lockdown, and since there is a wall of pent-up demand, we expect the downturn in 2022 to be orderly and modest.”
In light of this, BuyersBuyers has conducted extensive research into suburbs poised for the strongest growth. The team has generally looked for land-locked suburban locations and houses that are easy to rent out with the potential to add value to the property through renovation, extension or devlopment.
For units in particular, areas with established dwellings in boutique blocks with a high land value content and a point of scarcity – such as water or district views – were explored.
Top 10 Investment Suburbs in Melbourne for Houses (median price up to $1.3 million)
- Burwood East – $1,303,234
- Blackburn South – $1,345,287
- Cheltenham – $1,334,079
- Chelsea – $1,247,282
- Highton (Geelong) – $1,024,287
- Belmont (Geelong) – $811,405
- Glenroy – $909, 772
- Keilor East – $1,039,600
- Reservoir – $1,025,038
- Preston – $1,283,961
Burwood East, 3151
Currently home to 3,378 properties, Burwood East is located in Melbourne’s inner east, about 17 kilometres east of the CBD. Both Mount Waverley Secondary College and Forest Hill College’s school zones fall in the suburb. Around 300 houses are currently listed for sale in the suburb.
Blackburn South, 3130
Also located in Melbourne’s inner east, 16 kilometres east of the CBD, Blackburn South is home to 2,288 properties with a high median of $1.355 million. Blackburn South is home to several shops along Canterbury Road and there around 220 houses currently for sale.
Cheltenham, 3192
Located 18 kilometres from the Melbourne CBD, Cheltenham comes third on the list. The inner south suburb has 5,933 properties with a median price of $1.33 million. Currently, there are around 170 houses for sale.
Chelsea, 3196
Chelsea, about 30 kilometres south of the Melbourne CBD, currently has 1,636 properties with a median price of $1.25 million. Chelsea has smaller household sizes and a higher proportion of elderly people compared to most Melbourne suburbs, with about 100 houses for sale currently.
Highton, 3216
An inner suburb of Geelong, Highton makes an appearance on this list with 5,915 properties at a median of $1.02 million. Highton has two shopping centres and a popular sport precinct. Currently, there are 220 houses for sale.
Belmont (Geelong), 3216
Also an inner suburb of Geelong, Belmont is one of largest, oldest and most popular suburbs in the city. There are 4,824 properties in the suburb, with a median house price of $811,405 one of only two suburbs on this list with an median below $1 million. There are currently 440 houses for sale.
Glenroy, 3046
Located 12 kilometres north west of Melbourne’s CBD, Glenroy has 5,109 properties with a $909,772 median – the only Melbourne suburb on this list with a median below $1 million. The suburb is described as being a mix of inner grid living and a family suburb. There are around 200 houses for sale at the moment.
Keilor East, 3033
Located 13 kilometres north east of the Melbourne CBD, Kelior East is home to 4,553 houses with a median price of $1.04 million. There are currently 400 houses for sale, and the suburb has a population of 15,078.
Reservoir, 3073
Located 11 kilometres north of Melbourne’s CBD, Reservoir is the largest suburb on the list, being home to 12,556. The median house price is $1.03 million, and there are 400 houses for sale. Being an established suburb, there are a range of standard brick homes, weatherboard home and new developments.
Preston, 3072
Preston, nine kilometres north east of the CBD, is home to 9,164 properties with 380 houses currently for sale. It has a population of 33,790 and host many schools along with the Melbourne Polytechnic Preston Comus, which offers vocational and tertiary courses.
Top 10 Investment Suburbs in Melbourne for Units (median price up to $850K)
- Kew – $848,098
- Doncaster East – $856,014
- Camberwell – $854,014
- Carnegie – $645,017
- Caulfield North – $715,943
- Cheltenham – $701,077
- Pascoe Vale – $661,352
- Glenroy – $580,354
- Springvale – $560,074
- Glen Waverley – $875,777
Kew, 3101
Located five kilometres east of the Melbourne CBD, Kew is an influent suburb that is home to 5,042 properties. Units in the area have a median of $848,098, with over 1,000 units and apartments for sale. The suburb has many public and private schools, with a population of almost 25,000.
Doncaster East, 3109
20 kilometres northeast of the Melbourne CBD is Doncaster East, which is home to 4,199 properties. On the market there are currently 450 apartments and units for sale, with a median price of $856,240 for these types of dwellings. The suburb is home to 30,926 people, according to the 2021 census.
Camberwell, 3124
With 3,428 properties for sale, Camberwell is located nine kilometres southeast of the CBD. There are 720 units and apartments for sale, with a median of $854,014. The suburb is known for grand and historic residences along leafy streets.
Carnegie, 3163
With 6,393 properties, Carnegie is located in the City of Glen Eira local government area, 12 kilometres south east of the Melbourne CBD. The suburb has a well known shopping precinct, and currently has 450 units and apartments for sale. The median price for these dwellings is $645,017.
Caulfield North, 3161
Nearby is Caulfield North, 11 kilometres southeast of the Melbourne CBD, which is home to 4,583 properties. The suburb is known for having a significant Jewish population and a high level of educational attainment among their population, with 45.6% having a bachelor’s degree or above. There are currently 991 apartments and units for sale, with a median of $715,943.
Cheltenham, 3192
Also on the house suburb list, Cheltenham is also one of the best suburbs for unit investments. There are 330 apartments and villas for sale, with a median price of $715,943.
Pascoe Vale, 3044
Pascoe Vale, nine kilometres northwest of the Melbourne CBD, is located in the City of Moreland local government area, and is home to 18,171 residents, per the latest census. The unit and apartment market has 4,152 properties with a median of $661,352, with 330 currently for sale. The suburb is known for many gardens and parks, with the Moone Ponds Creek’s stormwater canal providing water.
Glenroy, 3046
Glenroy, in Melbourne’s northwest 12 kilometres form the CBD, has 4,350 units and apartments, with over 300 currently for sale. The median price for these types of dwellings is $580,354. Glenroy is located in the City of Moreland and has 11 schools in the suburb.
Springvale, 3171
Located 22 kilometres southeast of the Melbourne CBD, Springvale has a population of 22,174. It is a large suburb, spanning 11.2 sq km with 3,212 properties. Units have a median price of $560,074 – the lowest on this list – with 436 such properties for sale.
Glen Waverley, 3150
19 kilometres east of Melbourne’s CBD, Glen Waverley is located in the City of Monash and has a large population of 42,642. The suburb has 4,325 units at a high median of $875,777, with 302 such properties currently listed for sale.
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To find out the Top 20 Best investment Suburbs for Sydney, check out this article.
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