- Posted By Navin De silva
Why suburban Melbourne is the ideal investment in the long run
After years of continuous growth and vast development around the city, Melbourne’s property market is still a topic of interest to investors all over the world and after it peaked in 2017, the market has taken a slight breather since but is beginning to rise again and the suburbs are favourites to lead the charge and will undoubtedly grab investors’ attention.
So why would you invest in the suburbs rather than the heart of the city?
Population growth for one, over the past few years migration levels from overseas and inter-state have been on the rise and due to the attractive living costs, also when compared with the city centre, living In the suburbs is becoming increasingly attractive to families or young professionals alike, the lower living costs and rising population make the suburbs an ideal investment in the long term.
Developments in infrastructure, more specifically suburbs with increased transport links are attractive prospects, for example North Melbourne’s new train station and the Arden precinct renewal which aim to be finished by 2025 plan to transform Arden into a major employment and residential area bringing 34,00 jobs and housing for 15,000 people to the area, improving the local economy, job market and lifestyle. The gentrification of suburbs such as North Melbourne, Richmond and Kensington means that living standards are increasing and trendy cafes and wine bars are popping up all over the place, leaving a strong demand for housing.
Low vacancy rates mean that rentals are rising and consequently so are rental yields which is good news for investors. Housing in the suburbs has lower vacancy rates than in the city centre as people living in the centre tend to relocate more frequently than those who live in the outer suburbs, meaning there is a more constant cashflow for landlords and they have more leeway to charge higher rental prices.
So which suburb should you invest in? It largely depends on the buyer’s needs and wants.
- For first time buyers or those on a lower budget, the outer suburbs within a 30km radius of the city offer a strong choice. Suburbs such as Craigieburn, Mickleham, Rockbank, Cranbourne and Clyde north have house and land packages available for an average price of around $500,000. Craigieburn and Rockbank are both newly evolving areas that are ideal for families and maturing couples, offering average rent prices of $350 - $400 a week giving strong rental yields and a growth rate of around 8.5% for houses in the past 5 years. Cranbourne and Clyde North both offer attractive living costs but haven’t performed as well as other suburbs in terms of growth.
- For families looking to be closer to the city, suburbs towards the bay side such as Malvern, Brighton, Elwood, Sandringham and South Melbourne have consistently high demand due to them being highly desirable areas to live and raise a family, as they in close proximity to some of the best private schools in Melbourne, with house prices up to $1.3 million.
- For investors on a high budget who want the finest Melbourne has to offer, Toorak, Hawthorn and Middle park offer high end luxury houses with prices all the way up to $3 million.