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property investment melbourne

Sorry, Sydney: Melbourne is the #1 place in Australia for investment

January 9, 2019 10:00 am by Upside

After topping Sydney yet again in 2018 to be the most livable city in Australia, Melbourne has yet another title to celebrate this year. According to a real estate forecast by the Urban Land Institute (ULI) and PwC, Melbourne has also come out on top over Sydney to be the Asia Pacific’s best place to invest in property for 2019.

The Emerging Trends in Real Estate Asia Pacific 2019 report found that Victoria’s capital ranks first both in terms of investment and development. Singapore was ranked second, followed by Sydney, Tokyo, and Osaka.

So what makes Melbourne the best place to invest in property in the Asia Pacific?

Breaking down the numbers: why Melbourne is the best place to invest in Australia

According to the report, one of the main reasons Melbourne ranks higher than Sydney as the best place to invest in property is due to the fact that the city’s office development pipeline is more constrained. Because of this, there are likely to be less vacancies in coming years, which means the cost of rental is likely to increase.

Melbourne also has a good yield spread when it comes to the cost of debt and sovereign bonds, a deep, liquid core market (meaning there is low volatility and good supply/demand), and fair potential for rental growth.

“Many investors in the region are looking to Australia’s largest1 cities for investment opportunities,” said Susan McDonald, ULI Australia chair, and head of retail at Mirvac.

Both Melbourne and Sydney are core markets at heart but we are seeing that with the number of investable assets significantly lower than in Japan there is strong competition to place capital, especially with so many international players looking to buy.”

What are the next suburbs to boom in Melbourne?

While the ULI and PwC report shows that Melbourne is Australia’s weakest market for residential property in 2018 due to falling house prices, good migration patterns to the city are a sign that in the long term Victoria’s capital should recover. On top of that, now is a good opportunity to invest in property, with house prices at historically low levels and interest rates unlikely to increase until at least the middle of 2019.

With that being said, not all property investments are equal. If you’re looking to invest in Melbourne, these are five suburbs to keep an eye on:

1. St Albans

This suburb in Melbourne’s west has good infrastructure and affordability with a median house price around $550,000, making it a strong consideration for any buyers looking for the best value property in Australia. In the past 5 years, property in St Albans has increased over 61.8%, and rental vacancy rates are at 1.3%, which is lower than the city’s average of 1.5%.

2. Melton South

Melton South has been ranked as one of the best places to invest in Australia, thanks to its high cash flow and capital growth potential. Located 35km from the CBD, the suburb has excellent transport links to the city, Docklands, and the airport, and there are 11 new suburbs planned in the area. In 2017, Melton South’s auction clearance rate increased over 400%.

3. Wallan

Wallan is the nation’s top performing suburb when it comes to consistent capital growth, according to recent research from CoreLogic. The median house price in Wallan is $533,062, which is a 36.8% growth in the past year. Over the past five years, Wallan had an incredible 63.1% growth in value. With the population expected to grow again by a quarter in the next half-decade, Wallan is one to watch for investors and first home buyers.

4. Coolaroo

In 2017 properties in Coolaroo had a 100% clearance rate at auction, which showed a strong demand for housing in the area. In 2018, it’s no surprise that the median value of house prices in Coolaroo continued to grow, with a reported 32.2% increase - which makes it one of Australia’s top five best performing suburbs for growth.

5. Warrandyte

Warrandyte is the nation’s most in demand suburb, according to realestate.com.au’s Property Outlook Report. Although houses here come with a hefty price tag (the median value is $1,132,750), property listings in Warrandyte receive almost 300% more views than the average Victorian home, and Warrandyte has some of the fewest properties for sale online.

If you’re looking to get into the property market, now might be the time to consider property investment in Melbourne over Sydney.

Whether you’re looking to buy or sell in Melbourne, Upside can help you get more from your property. Get in touch for a free property appraisal from an experienced, local Upside agent near you today!

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