Buying an Investment Property in Melbourne

buying investment property in melbourne

Melbourne is Australia’s second largest city, and as a major metropolis, offers excellent opportunities for investors.

The property market in Melbourne has been one of the strongest and steadiest performers in Australia over the past few years.

In Australia, property prices in Melbourne have risen rapidly, second only to booming Sydney out of all our capital cities. Historically, the city presents a diverse range of lucrative investment opportunities, with long-term property trends showing values going from strength to strength. Rental yields are also strong, with moderate growth alongside property values.

In terms of demographics, Melbourne also presents a strong investment opportunity. It is Australia’s second largest city, with a culturally and economically diverse population base. Melbourne is a cosmopolitan city with many thriving industries, from culture and entertainment, to hospitality and tourism, trade and industry, and commerce.

Transport infrastructure in Melbourne is also strong, with ongoing investment into road, rail and tram infrastructure. There are many universities and colleges across the city, with strong job growth and relatively low unemployment rates.

Melbourne is also experiencing robust population growth, with many suburbs expanding rapidly to accommodate the increase.

What Makes a Good Investment Property in Melbourne?

Melbourne is a large and diverse city that is well-planned and easily accessed by roads and transport, presenting a plethora of great investment opportunities. Investing in property is all to do with long-term capital growth, so doing your research and investigating the locations with the most potential is crucial.

This is where you will work closely with your property strategist, who will be able to present the best handpicked opportunities in Melbourne.

There are three main factors that influence the potential of a property as a lucrative investment.

The Location – Location is a crucial factor influencing a property’s value. This includes proximity to schools, public transport, parks, libraries, hospitals, shops, cafes and universities. Melbourne has seen plenty of development in inner city and fast growth in the north and west. Melbourne’s inner eastern and south eastern suburbs also traditionally present excellent investment opportunities.
Acquiring property based on location requires a degree of insight and foresight. For example, scoping out growing populations and development of infrastructure, not basing your choices on volatile industries and being aware of proximity to cultural or financial hubs.

The Property – Of course, the property itself another major factor. A good investment is choosing a property that will always be in demand. This may be influenced by something like the age demographic of an area, as property becomes relatively more expensive floorspace can be one of the first things a builder may compromise on, so looking for strong floor plans, or buildings which offer strong tenant facilities such as private dining rooms, private pool cabanas or well-equipped gyms and pools can help to set your property apart.

As with the rest of Australia, houses are still highly sought after across Melbourne. That being said, the city also offers many attractive investments in the form of units and apartments, which are increasingly popular with investors.

The Market – Researching the market is a crucial part of choosing the right investment property. This includes exploring data on current and historical sales and discovering trends and patterns in the market.

Historically, Melbourne has a strong property market with median house prices rising 7.2% per annum over the last decade. Have a look at our guide to finding the best investment opportunities in Australia for more information on researching the market.

property investment melbourne

How Do I Research The Property Market in Melbourne?

When researching potential investment opportunities, your property strategist will be your eyes and ears. Researching the property market in Melbourne will involve investigating historical data and current sales trends, demographics and Census data, and market analysis’.

There are plenty of online tools for identifying the best suburbs to invest in, with a wealth of information at your fingertips. Some of these include:

Real Estate Institute of  VIC– Each state in Australia has its own real estate institute which provides market com

Residex – Residex is an award-winning property data resource for banking and finance industries, property professionals, investors and homeowners providing market and suburb reports,

predictions, rent reports and much more.mentary as well as median sale prices and other market data.

• – PropertyDATA provides analytical data collected by the real estate institutes and is widely trusted by banks, real estate agents, valuers and investors alike; an excellent research tool.

• – Here there is a a great ‘Invest‘ tab that can provides lots of valuable data on the top performing suburbs in Australia.

• Census – Census data is a great resource for looking into how suburbs and their population are changing and growing. Take note of the type of people living there, their incomes, their age and professions and how this might influence your choice. The “QuickStats” page is great for fast information.

• Australian Bureau of Statistics – The ABS has loads of useful data on population trends including migration, regional data, births, deaths and demographics.

Have a look at our guide to finding the best investment opportunities in Australia for more information on researching the market.

A Diverse Property Portfolio

To maximise the potential for long-term capital growth, your investment strategy should be based around building a healthy property portfolio featuring a diverse range of properties from around the country.

Here at Optimal Property Group, we always suggest a geographically diverse portfolio of property. A strategic spread of properties will mean that you will be in a better position to weather any financial fluctuations from changes in the markets across different capital cities.

While historically Melbourne presents a strong investment opportunity, many factors influence fluctuations in the market. This is quite a complex topic, which you can read more into here.

Whether you’re buying your first investment property and are interested in Melbourne, or are looking looking to diversify your portfolio and expand to new cities, we can help you achieve your goals. Feel free to get in touch today, we’d be more than happy to help.

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