Looking to invest in affordable property in Melbourne? Now might be the right time.

With interest rates reshaping borrowing power and the market adjusting after years of rapid growth, many buyers are now turning their attention to suburbs offering better value for money. While affordability has become more of a challenge across the board, recent shifts in Melbourne’s market may be opening doors for those who know where to look.

This year, Melbourne’s median dwelling value sits at $774,093, down -3 per cent over the past 12 months and -6.4 per cent since the last peak in March 2022. The median house price is $917,616, while units sit at $607,414.

Using a variety of data sources, we have uncovered some suburbs in and around Melbourne where property values are below the median. These offer potential for strong rental return, capital return, or both. Let's take a more detailed look at each in turn.

Shepparton is a regional city located about 180km north of the Melbourne CBD. The median house price is $462,250, up +3.2 per cent year-on-year, with a rental yield of 5.0 per cent. Units are priced at $389,000, up +9.3 per cent over the past year, with a 5.2 per cent yield. The low vacancy rate of 1.3 per cent reflects steady rental demand.

The suburb has reliable rail and road links to Melbourne and a growing, diverse population supported by its strong agricultural economy. Charlotte Pascoe, CEO of Stockdale & Leggo, has handpicked Shepparton as a suburb to watch in 2025.

“It has ongoing infrastructure improvements, including transport and community facilities,” says Pascoe. “It’s also known for a family-friendly atmosphere with good schools and community services.”

Bairnsdale, around 280 km east of Melbourne, offers some of the highest rental returns in the state for units. The median house price is $466,000 with a 4.3 per cent yield, while units cost $351,250 and return a massive 7.8 per cent. The vacancy rate sits at 1.3 per cent. As a gateway to the Gippsland Lakes and national parks, it attracts lifestyle renters and has a strong regional service economy.

Located 43 km west of the CBD, Melton is one of metro Melbourne’s most affordable investment options. The median house price is $470,750, yielding 4.5 per cent, while units sit at $380,000, returning 5.0 per cent. According to our data, the combined average rental yield of 4.5 per cent is one of the highest in Victoria. At 2.6%, Melton’s vacancy rate is slightly higher than other suburbs on this list. However, it still indicates moderate rental demand.

Melton has direct rail access to the city, expanding infrastructure, and a young, family-oriented population. The suburb has seen its population grow by over 70,000 in the last decade, and according to AllianceCorp, it's forecast to grow 3.98 per cent annually — nearly four times the national average. This is expected to double between now and 2046.

Approximately 21 km north of Melbourne's CBD, Coolaroo offers affordable housing options with strong yields. Houses are priced at $545,000 with a 4.6 per cent yield, while units, where available, return an impressive 5.4 per cent. The average rental yield across houses and units is one of the strongest in Victoria. The low vacancy rate of 1.2 per cent suggests a competitive rental market. Coolaroo offers a comfortable suburban lifestyle with a mix of residential and industrial areas.

Located in Ballarat, approximately 114 km west of Melbourne’s CBD, Soldiers Hill blends heritage streetscapes with strong investment fundamentals. Houses have a median price of $595,000, up +5.8 per cent over the past year and yielding 3.5 per cent. Units are priced at $385,000, up +13.2 per cent over the past year with a 4.5 per cent yield. The vacancy rate is 1.4 per cent, pointing to steady demand.

Popular for its walkability, proximity to Ballarat Station, and thriving café scene, the suburb attracts a mix of professionals, students, and long-term tenants. According to AllianceCorp, the Ballarat area is set to be Melbourne’s next satellite city with a new employment zone that’s predicted to create 9,000 jobs.

Just 32km south-west of Melbourne’s CBD, Werribee offers close proximity to the CBD while maintaining affordability. Houses have a median price of $610,000, down -0.8 per cent over the past year, and have a rental yield of 3.9 per cent. Units are priced at $430,000, down -1.1 per cent, but offer a stronger 5.2 per cent yield. The vacancy rate is 2.1 per cent, reflecting ongoing demand, particularly for lower-priced rentals. With a major train line, riverfront parks, schools and a growing town centre, Werribee has long-term growth potential.

Cranbourne, approximately 50km south-east of Melbourne’s CBD, has a mix of capital growth and rental returns. The median house price is $665,000 with a 4.1 per cent yield. Units sit at $479,500 and generate a 5.4 per cent return. On top of the strong yields, the low vacancy rate of 1.4 per cent highlights the high tenant demand. The suburb sits in a key growth corridor supported by new housing estates, local jobs, multiple schools, a major shopping centre, and access to the South Gippsland Highway.

Just 14 km from the CBD, Sunshine West offers inner-suburban access at a more affordable price point. The median house price is $675,500 with a 3.7 per cent yield, while units cost $600,000 and return 4.7 per cent. The 1.3 per cent vacancy rate can be attributed to the suburb’s proximity to the Western Ring Road, train stations, schools and employment hubs. It has a growing, multicultural community and strong long-term development prospects.

Spring Gully sits just outside central Bendigo, approximately 150 km from Melbourne. The median house price is $621,500, yielding 4.4 per cent. Prices down -13.4 per cent over the past year, creating potential value for investors looking to buy in at a discount. Units average $442,500, up +3.3 per cent, and deliver a strong 5.6 per cent yield. The 1.6 per cent vacancy rate reflects consistent demand from tenants.

Spring Gully is known for its bushland surrounds and quiet residential streets. It also offers quick access to Bendigo Health, La Trobe University, and the city centre — adding to its long-term rental appeal. According to John McGrath, CEO and founder of McGrath, in the McGrath Report 2025, the suburb is expected to surge.

“And the suburb is set for a boom, thanks to plans for a new housing development, school and general store,” says McGrath.

Located about 53 km south-east of Melbourne, Frankston blends affordability with lifestyle appeal. The median house price is $730,000, down -1.1 per cent over the past year, creating buying opportunities in a high-demand area. Units are $527,500, up +7.1 per cent, with a rental yield of 4.1 per cent, while houses yield 3.2 per cent. The vacancy rate is just 1.2 per cent, pointing to tight rental supply. Frankston has strong transport links, a major hospital, direct beach access and a growing town centre.

Cate Bakos, owner of Cate Bakos Property, has nominated Karingal, a pocket of Frankston, as an area to watch this year for its access to schools, tollways and amenities.

“Close to the gateway of the Mornington Peninsula, this location is showing no sign of slowing down.” says Bakos.

Frequently asked questions about affordable suburbs in Melbourne