Property Investment Update

Melbourne’s property investment market continues to be a rollercoaster ride. Underwhelming vacancy rates and a lack of many options for renters have seen rental prices continue to rise, which has been beneficial for those on the investing end. While interest rates have stabilised and we look to be over the worst of those pesky RBA announcements, the high loan repayments are still making it hard for those holding multiple or even one investment property.

However, there is definite light at the end of the tunnel, and a number of reasons to feel positive about Melbourne’s investment market heading to the tail end of 2023 and into the new year.

A buoyant outlook for the first time in 18 months
Smart Property Investment has noted that the inner, middle, and outer Melbourne property markets are looking as healthy as they have in years. The most notable stat sights that not since the June quarter of 2021 have both house and unit prices in all three of the Victorian capital’s rings recorded positive quarterly growth.

“As expected, stability has continued into the latter half of 2023, with the quarter showing strong signs of recovery on property prices across Melbourne and regional Victoria,” said new REIV President Jacob Caine.

The unit market is kicking goals and a great place for first time investors to begin their property journey. Victoria’s median unit price grew 1% in the three month period to October, with suburbs like Toorak, Bentleigh East, and Glen Waverley sitting in the top five for most expensive unit markets in the last quarter. The housing market should not be forgotten, with suburbs like Keysborough and Ringwood East seeing house price increases of 13.2% and 12.2% respectively.

Whether you’re looking to break into the unit/apartment market as a first time, or are considering a house investment, the numbers suggest the market is back on track!

City of Melbourne named the top pick for property investment
Australia’s number one independent real estate analyst, Hotspotting, has named the City of Melbourne as the top place to invest in property in Australia according to a recent article on realestate.com.au.

Spanning Southbank and Docklands to the south of the CBD, and Carlton, Carlton North, and Flemington to the north, Hotspotting has sighted the City of Melbourne as a “game changer”, due to the make-up of the municipality being 86% apartments and townhouses, as well as its strong prospects for capital growth.

Other factors that have seen the municipality rising to the top of the investment chart is a major shift in sentiment from investors, with an eye on more apartment purchasing due to reduced affordability and a change in lifestyle demands. The rise in rental prices was also a big reason that investors are looking to the CBD and surrounds.

Watch out for Melbourne’s Outer East in 2024
Australian Property Investment magazine has highlighted 3 top investment suburbs to watch out for in 2024, with two of the three suburbs in Melbourne nestled in the outer east.

Croydon South is the first of these two notable outer east suburbs that property investors should be looking at to purchase a house. With a median house price of $816,410, Croydon South has a socio-economic rank of 8, complemented by an average household weekly income of $1,876. It’s investor score of 81 ranks very high, thanks to  91.95% of properties being detached houses, as well as tenure leaning more towards ownership at 33.43% fully owned and 19.38% rented.

Heathmont is the other outer east suburb noted by API, and showcases an investor score of 80. A little more affluent and with median house prices just surpassing the $1m mark, the 93.72% of detached houses that make up the suburb create a promising landscape for house investors, as does the stable balance of fully owned properties at 38.26% and rentals at 17.95%.

A vacancy crisis in Victoria
The number of Victorian properties available for rent hit a record low in September, with potential renters fighting for what could be less than 8000 available residences. PropTrack’s insights into Victoria’s rental market found Victoria’s vacancy rate in September fell to 1.14 per cent, the lowest since they began tracking numbers in 2018.

“We are pretty confident that this is the lowest level on record,” said Anne Flaherty, economist at PropTrack. “And I think things will get worse, over the short term we are staring down the barrel of potentially even lower vacancy rates ahead.”

While things are dire for renters, there is an opportunity for investors. With a barren amount of rental properties available for Victorians, those looking for long term investments are in a good position to realise buoyant returns on their investment property.