Best areas in Victoria for property investment
Looking for the best areas to invest in Victoria? Well, based on recent market performance, you’re spoilt for choice, and according to recent forecasts, the future of Victorian property is looking very bright.
Like most buyers and investors, you’re probably on the hunt for a solid property that can realise good capital growth and deliver epic returns. Wondering which Victorian regions investors should set their sights on in 2021? Let’s do some analysis below.
Firstly, how has the Victorian property market been performing?
Over the past year, the Victorian market has gone from strength to strength, despite COVID-19. According to CoreLogic’s latest home value index, property values in Melbourne have risen 10.4 per cent annually, and regional Victoria has outpaced this, with annual growth sitting at a whopping 18.1 per cent. That is pretty insane.
It seems like no matter where you look, from Warnambool in Victoria’s south west all the way to the Dandenong Ranges, it’s actually pretty hard to find a corner of the state that hasn’t increased in value over the past year.
Melbourne's median property price is expected to rise by +16 per cent by the end of 2021, and is tipped to rise further in 2022
But is there still fuel in the tank? Apparently so! According to ANZ’s recent forecasts, Melbourne’s median dwelling price will have risen by +16 per cent by the end of 2021. That’s a total increase of $109,152 by the end of the year.
Many factors are contributing to this growth: low interest rates, government stimulus like JobKeeper and JobSeeker, mortgage repayment holidays… the list goes on. And if you throw a bit of healthy FOMO into the mix, and the ramping up of the vaccine rollout, you can assume that not much is going to taper this kind of growth. Hey, if a once-in-a-lifetime pandemic couldn’t land a blow, we're not sure what will.
Melton is one of the most affordable suburbs in Melbourne, so is a great entry point for first-time investors. At the minute, the median price for houses is $420,000, while a unit will set you back somewhere around the $335,000 mark. Over the past year the median price has increased by 5.18 per cent, compared to the national average of 4.3 per cent.
Quick stats on Melton:
- Located in a high growth corridor
- Only 35 minutes form Melbourne's CBD
- According to the ABS, 32.9 per cent of the population are renters
- Gross rental yield for houses: 4.16 per cent
- Gross rental yield for units: 4.94 per cent
Just 13kms from Melbourne’s CBD is the suburb of Brooklyn. It’s currently viewed as a cheaper alternative to the bordering suburb of Yarraville, which currently has a median house price of around $1.1m.
Brooklyn on the other hand has a median house price of around $852,000, and units sitting at around $617,000. Brooklyn is a high-demand market, and according to CoreLogic, over the past 12 months, house prices have shot up around 21.4 per cent.
Properties in Brooklyn are also recording rental yields well above Melbourne’s median
Properties in Brooklyn are also recording rental yields well above Melbourne’s median, and over the past five years have experienced a high compound growth rate of 5.7 per cent for houses and 6.7 per cent for units.
With the current state of growth pushing more and more buyers out, we think Brooklyn is a suburb to watch.
According to buyers agent Lloyd Edge, the suburb of Watsonia North is tipped for solid growth. Coming in at Melbourne’s middle-value range, Mr Edge believes that the suburb is on the cusp of solid growth.
“Watsonia North has seen little action, but once developers go in and start subdividing more blocks, this should bring the suburb to the forefront of Melbourne’s price growth,” he said.
According to realestate.com.au, the suburb is a high-demand market, with an average of 3052 visitors per property—nearly double the state average.
Over the past year, the median price in Watsonia North has increased by 13.17 per cent to $840,000.
As one of the largest regional areas in Victoria within commuting distance to Melbourne, Geelong is enjoying steady growth as a result of city slickers seeking a seachange off the back of the pandemic.
Only one hour from Melbourne, Geelong is one of the fastest-growing property markets in the country with no signs of slowing down.
According to the latest Domain House Price Report, the suburbs recording the most impressive growth over the past year include:
|Suburb||Annual growth||5 year growth|
|East Geelong||25.8 per cent||83.5 per cent|
|Belmont||11.1 per cent||54.6 per cent|
|Herne Hill||12.1 per cent||68.8 per cent|
|Norlane||7.2 per cent||70.1 per cent|
|Newtown||18.2 per cent||60.5 per cent|
Agents and experts alike believe that property prices in Geelong will continue to soar as growth across a range of sectors including government, manufacturing, technology, education and health is expected to rise.
Another Victorian region recording impressive growth is Alpine in the state’s north-east. The Alpine Shire is well known for the beautiful towns of Bright, Mount Beauty, Myrtleford, Harrietville, just to name a few.
Median property prices in Alpine have increased by 92.1 per cent in the past five years
Over the past year, the median price has increased by 33.7 per cent, and over the past five years, it’s up 92.1 per cent, which is a stellar result. In addition, rents have risen by double digits over the past year, up a huge 21.4 per cent to $425 per week, enticing holiday home owners to place their properties into the rental pool to capitalise on this huge demand.
Demand for housing in the region isn’t expected to wane, with a steady stream of tree-changers from Melbourne heading to the area in droves.
Another solid regional pick, and just an hour and a half from Melbourne is the beautiful regional city of Ballarat. Like many other regional areas in Victoria, Ballarat experienced a population surge as a result of COVID-19, as Melburnians left the city in search of more space, less lockdowns, and more bang for their buck.
As a result of this, Ballarat is one of the fastest growing towns in regional Victoria, with its median property value rising 17.6 per cent in the past year, and 58.7 per cent in five years. According to CoreLogic, properties in Ballarat are some of the fastest-selling in Australia’s regional market, selling within 30 days on average and at the lowest vendor discounting rate of just -2.4 per cent.
Locals are calling it the ‘Golden Era’ for Ballarat’s property market and lifestyle, as period homes are snapped up for a third of the price of something similar in Melbourne.
There are big plans for Ballarat, with over one billion currently invested into major infrastructure projects, including the redevelopment of Ballarat Railway Station and the Ballarat Health Services Base Hospital, as well as line and road upgrades on major arterial transport lines and thoroughfares into the city. All of this investment makes you think that the government certainly recognises the future prosperity of this regional city.
Standout suburbs for investment in Ballarat include Alfredton, Soldiers Hill, and Delacombe and Ballarat Central.
While already popular with investors due to its affordability and accessibility to Melbourne’s CBD, Sunshine is tipped for accelerated growth as the Victorian Government is expected to grant the suburb as the preferred route for Melbourne’s $13 billion 27km Airport Rail to the CBD.
If this plan comes to fruition, the suburb will become a transport hub around the same size as Southern Cross Station in Melbourne.
Sunshine is on the brink of significant infrastructure changes which will create thousands of jobs for the region
This transport hub is also expected to become a gateway into regional Victoria under the state’s Western Rail Plan, which would include fast rail to other property hotspots Ballarat and Geelong.
Sunshine is also expected to receive a significant infrastructure cash injection, with health services, roads, education and other amenities being revamped in the coming years. This is set to generate thousands of jobs for the region’s population. Another suburbs to watch nearby is Braybrook.
What other areas in Victoria are projected to experience a property boom in 2021?
As a rule of thumb, any satellite cities within striking distance of Melbourne are proving popular with investors due to improved transport links making them more accessible; more affordable prices; and a growing demand for rental properties as city-slickers move to the region and battle it out with locals to secure property.
Places like the Bass Coast, the Surf Coast, Baw Baw, and the Macedon ranges continue to be places to watch. Warragul-Drouin in the state’s West Gippsland region has been another top performer, so is certainly worthy of a spot on your radar.
Where suburbs or areas should investors avoid?
If you are considering investing in a unit in Melbourne metro, be wary. While the cheap prices may entice you, you need to be aware of the underlying conditions of this market before you make a purchase.
The apartment market in Melbourne CBD is grappling with oversupply and poor demand due to border closures and a lack of migrants and international students. Net rentals are more likely to be negative, meaning that any investors in these markets are more likely to lose money in cash flow terms.
Other suburbs to be wary of include Docklands and Southbank.
How are property prices in Victoria expected to change in 2021?
Most analysts agree that the current pace of growth is not sustainable, and that 2021 will see the largest growth in property prices, before we hit 2022 and experience a softening.
According to Westpac’s latest forecasts, Melbourne is expected to increase in value by 16 per cent in 2021, and then a further 6 per cent in 2022.
Property Analysts from NAB believe property prices in Melbourne will rise 17.6 per cent in 2021, and 3.5 per cent in 2022.
How to identify an area with high growth potential
If you are serious about property investment there’s a wealth data out there to help you identify the suburbs with the highest growth potential. Look for investment properties where:
- Major infrastructure projects are planned or in the works, as these will improve the local economy, jobs market and lifestyle.
- There is low supply and high demand, as this will drive property prices higher.
- The rental yield is rising, as this indicates there is strong demand for rental accommodation in the area.
- The local population is growing and there is a lot of renovation activity and new shops and cafes opening.
Buy into a property hotspot at the right time and you could greatly increase your ROI in a much shorter time frame.