Melbourne Property Market Research

Melbourne’s property market has long been recognised as a vital player in Australia’s real estate scene. From charming inner-city terrace houses to sprawling suburban homes, its breadth and diversity champions endless investment opportunities. 

Of course, ‘endless’ is a bold claim, however, there’s plenty of evidence to back it up. 

Recent data from CoreLogic tells us that Melbourne’s property market has experienced an upturn in median house prices, with a 5.3% rise in dwelling values over the past year. And considering that Melbourne has recently become Australia’s most populous city, it has the right formula for future long-term growth. 

This surge in property values is driven by a few factors, including population growth and infrastructure development, both of which have positioned Melbourne as a prime choice for property investment. Despite economic and environmental impacts over the past few years, the resilience of the property market reflects its strong fundamentals and underscores its investment appeal. 

In Melbourne, the choice between investing in houses and apartments can greatly influence your financial outcome. Let’s further explore the investment potential of Melbourne’s property market as well as the financial implications tied to each property type.

The Role of Land Value in Property Investments 

While it may change from suburb to suburb, the initial prices of houses and apartments usually differ significantly. Houses, with their larger space and potential for land appreciation, tend to have a higher initial cost. On the other hand, apartments, although smaller, offer a more affordable entry point into the property market.

However, a Melbourne property’s value is intrinsically linked to the land on which it’s situated. Consider this: When you buy a property, you’re essentially investing in two components — the land and the building. While the building depreciates over time, the land typically appreciates. 

Current market trends show that established houses, especially those on large land parcels, offer substantial long-term capital growth. This growth is primarily driven by the underlying value of the land, which tends to appreciate more than the property itself.

Apartment or House: Which is the Smarter Investment?

When it comes to property investing in Melbourne, the house always wins. At Property Analytics, we purchase established houses on decent-sized blocks on behalf of clients who are seeking to increase their wealth.

But why the focus on established houses?

The answer lies primarily in their rarity and the high demand for such properties. In turn, these factors then work to drive up their market value. Unlike apartments, which can be rapidly developed in large numbers, the supply of established houses is limited. This makes them a more stable and potentially sound investment.

Houses are generally more expensive than apartments, and the rental yield you get from them is relatively lower. But, our analysis proves that houses make for far better investments over apartments because capital growth is more important to building wealth than rental yield.

The takeaway? Higher purchase prices and holding costs are the main reasons why property investors would consider apartments over houses.

With decades of buying experience, Property Analytics are your trusted buyer’s advocate in Melbourne. You can learn more about why we favour houses over apartments when it comes to property investments here.

Crunching the Numbers: Asset Appreciation vs. Cashflow

Wealth is created through asset appreciation, not through cash flow. In other words, you should prioritise capital growth over rental yield.

The most successful property investors recognise this truth, and invest in the type of properties that increase the most in value over time: houses. Land appreciates in value, whereas the dwellings that sit on land tend to depreciate in value. Think about why you get a property depreciation tax break when you rent out newly built properties? Properties with reasonable land content (e.g. houses or townhouses) experience significantly higher capital growth than properties that lack land content (e.g. apartments/units).

Most of us know this intuitively, but what does the data say?

• Year-on-Year % Growth in House Prices of 10-15% has been common, whereas Unit Price Growth typically hovers around 5%
• During Melbourne’s last growth cycle, from 2013-2018, House Prices increased far more than Unit Prices: from $548,000 to $921,000 (+68%) versus $484,000 to $619,000 (+28%).
• Even allowing for the worst deflationary period in living memory, from late 2018 to mid 2019, house prices today are +60% higher than they were in early 2013; Unit Prices are +40% higher.

The 3 key metrics that every property investor should know:

1. The Equity ($ Cash) Needed to purchase and retain a property investment – based on the Loan:Value Ratio and mortgage repayments made after rental income
2. The Equity Gained through Capital Growth
3. The Net Position – difference between Equity Needed and Equity Gained

In a common example, a house would have cost you about $120,000 more in 2012, and assuming an 80% LVR, that would mean you’d have had to stump up an extra $24,000 of your own cash at the time of purchase. And, because the rental yield of the house is lower than a unit, you’d have to tip in an average of $4500 per year to support the mortgage, compared to about $2400 for an Apartment.

But, because house price growth has been so much greater than Unit Price Growth, you would be far better off today – like $124,000 better off.

Invest smarter, not harder. Seek expert property investment advice from the best buyer’s agent Melbourne has to offer. 

What Type of Property Should You Buy As An Investment in Melbourne?

This brings us to the next point — strategic property selection. Investing to grow your wealth isn’t as simple as buying a house over an apartment. With the assistance of a buyer’s agent in Melbourne, in-depth research, strategy, and planning is the pathway to a smarter investment.

Regarding established houses, location is a key determinant of value. Look for properties in desirable neighbourhoods with solid infrastructure and promising future development plans. Consider local amenities such as schools, shops, and public transportation. These factors not only contribute to the property’s desirability but also its potential reliability.

Below is a list of the top ten most livable suburbs in the Greater Melbourne Area, according to RMIT’s 2022 Social Infrastructure Index – which rates popular suburbs according to factors like access to services like health, train stations, education and community centres. 

1. Collingwood
2. Fitzroy
3. North Melbourne
4. Carlton
5. South Melbourne
6. Carlton North
7. Richmond
8. Flemington
9. Windsor
10. Fitzroy North

As you can see, the list above is dominated by the inner North and its surrounding suburbs. If this isn’t your cup of tea, we’ve compiled a list of The Speediest Melbourne Suburbs for Real Estate Sales. 

Are you thinking about dipping your toes into Melbourne’s property market but don’t know where to start? Turn to Property Analytics, a seasoned buyer’s agent for Melbourne investment properties. 

Melbourne’s Long-Term Real Estate Investment Potential

How does the long-term value of houses compare to apartments? The evidence from Melbourne’s real estate market over the past seven years suggests a compelling case for houses. With a consistent growth trajectory that appears poised to persist according to current data and market forecasts, houses demonstrate their potential as a lucrative investment option.

If you’re seriously considering dipping your toes into the Melbourne property market, take the time to understand the basics, examine the metrics, weigh up the financial implications, and, most importantly, make an informed, strategically sound decision. Property investment, after all, is not just about short-term gains. It’s ultimately about building long-term wealth, and Melbourne’s market is one that could help you do just that.

Get in Touch with the Top Buyer’s Agent in Melbourne 

It’s clear there are investment opportunities popping up in all corners of the city. If you want to team up with experienced investors and buyer’s agents in Melbourne, just give Property Analytics a shout. They’re here to provide real help and guidance as you navigate the ever-changing property market. 

Things change a lot in ten years, and the Australian housing market is not immune. This transformation has been marked by several key trends and shifts that have reshaped the way Australians buy, sell, and invest in real estate.

The pandemic, oversupply, sustainability, changing preferences and rapid price growth are just a few examples contributing to historical change. Not to mention the digitisation of the real estate industry, which grants buyers and sellers access to a landscape of information like never before. 

Even through all the ups and downs, one city has consistently and unsurprisingly outperformed the rest: Melbourne.

At the heart of the metamorphosis is a strong economy, steady population growth, and the city’s appeal as a prime location for both domestic and international investors. The demand for Melbourne properties has been further amplified by the city’s diverse range of housing options, which cater to a wide spectrum of buyers — from first-home buyers to seasoned investors. 

Growth in ballpark terms is always welcome news, but which suburbs have hit a home run? Let’s take a look at the Melbourne destinations where house values have essentially doubled in a decade. 

A Snapshot of a Decade of Growth

Over the past decade, the search for a better lifestyle has sent buyers flocking to the Mornington Peninsula. The sunny Melbourne suburbs dotting the area have emerged as hotspots for property price growth. These include St Andrews Beach, Dromana, Frankston North, Crib Point, and Sorrento, all of which have experienced substantial increases in property prices.  

However, it’s not just the appeal of these individual suburbs that have contributed to their growth. Broader market trends, city planning initiatives, and infrastructural developments also play a pivotal role. For instance, the expansion of the Mornington Peninsula region, a locale renowned for its wineries, beaches, and relaxed lifestyle, has had a ripple effect on its surrounding suburbs.

With all signs pointing to long-term growth, this has piqued the interest of those looking for their first or next investment property. 

No strangers to the tumultuous market, Property Analytics are licensed buyer advocates based in Melbourne. Reach out to us for a friendly chat about up-and-coming Melbourne suburbs. 

The 5 Suburbs Leading the Way  

1. St Andrews Beach, 3941

St Andrews Beach, a serene coastal enclave, has experienced a remarkable surge in property values over the past decade. This impressive growth can be attributed to its captivating coastal appeal and the ever-increasing demand for beachfront properties. With its close proximity to Melbourne’s CBD, this tranquil suburb has become a magnet for home buyers and investors alike. The result? A consistent demand that has propelled property prices to new heights.

Spanning a distance of approximately 3.1 square kilometres, St Andrews Beach is home to an abundance of park areas that account for nearly 37.2% of its total area. Beautifully kept parks and coastal living have both been major draw cards for families and home buyers. 

In line with overall trends on the Mornington Peninsula, the St Andrews Beach area has had the most substantial price appreciation over the past decade, with property values rising 145.6%. This remarkable growth cements its status as one of Melbourne’s most sought-after beachside suburbs. 

2. Dromana, 3936

Dromana has been one of Melbourne’s most popular holiday spots for some time, and demand for coastal homes on the Peninsula isn’t showing any signs of slowing down. The Dromana area offers easy access to the beach, as well as a great selection of restaurants, wineries and other attractions. 

Just over an hour’s drive from the CBD, this charming suburb combines the allure of a small-town atmosphere with the convenience of a larger city. Whether purchased for permanent residence, holidays or investments, it’s no surprise that Dromana has seen a consistent rise in property prices..

Over the past decade, Dromana has seen property values climb by more than 130%, cementing its position as a popular and competitive location for real estate investment. 

3. Frankston North, 3200

Frankston North has undergone a significant transformation over the past decade. From significant infrastructure projects to attracting a growing number of young professionals, Frankston North has witnessed a substantial uptick in property values. Its affordability, combined with its prospects for future growth, positions it as an attractive option for both first-time homebuyers and savvy investors. In the span of a decade, Frankston North has seen property values surge by an impressive 132%. This has earned it a reputation as a compelling destination for those seeking an evolving community with the potential for substantial returns on investment.

4. Crib Point, 3919

Now, turning our attention to Crib Point, we find a quieter suburb that has quietly but steadily witnessed an upward trajectory in property values. Its charm emanates from the fusion of a serene, idyllic setting with affordable housing options, making it a reliable choice for families and retirees seeking the quiet life. 

Spanning approximately 6.5 square kilometres, Crib Point features 12 parks, covering nearly 2.3% of its total land area. Green spaces, beaches and pockets of natural beauty are a winning formula for leisure and recreation.

Over the course of a decade, Crib Point has seen property values rise by over 130% and the promise of lasting returns on investment.

5. Sorrento, 3943

Last but not least, we have Sorrento. Renowned for its historic limestone structures and picturesque sandy shores. Sorrento has undergone a substantial surge in property values, owing to its fusion of historical significance, cultural richness, and natural splendour. 

Covering an area of approximately 7 square kilometres, Sorrento is full of excellent property opportunities, local amenities and a real community feel. This offers residents abundant opportunities for relaxation and recreation amid its picturesque beachside views.

Over the span of a decade, Sorrento has seen house prices soar by 121%, marking our fifth and final example of a Melbourne suburb that has doubled in price. 

Predictions for the Future

Looking forward, all signs point toward long-term future growth. Industry experts predict that the next decade will continue to see a sustained and steady incline in Melbourne’s property market.

However, the suburbs that will see the most significant price growth may not be the same as those that dominated the past decade. Factors such as infrastructure projects, changes in population demographics, and evolving buyer preferences will likely influence which suburbs emerge as the top performers.

For property investors, this presents both opportunities and challenges. On one hand, there’s the potential for high returns in suburbs poised for growth. On the other, there’s the risk of investing in areas that may not perform as well due to factors beyond their control.

If you’re an investor weighing up your options, it’s worth seeking the advice of a well-versed buyer’s agent for Melbourne’s property market. 

Pinpoint Your Investment Strategy with Top-Performing Buyer’s Agent in Melbourne

With so many suburbs and areas to choose from it can be difficult to know which ones have the most potential for the next ten years ahead. Collaborating with an experienced buyer’s agent in Melbourne is the first step to success. Together, we can work toward an investment strategy to secure your financial future.

Winter, Spring, Summer, Autumn. These four words can haunt just about anyone in the real estate market – because there’s one thing that everyone wants to know.

What is the best time of year to sell my property? And what about the best time to buy?

Winter and Spring are often touted as the best times of the year for sellers, but what season really stands out as the best and what other factors do you need to consider?

I’m here to take a look at the various rationales and some statistics behind them to determine the best time to buy or sell a property.

What Factors Affect House Prices (and is time of year really one of them?)

Before I delve deeper into things, it’s worth asking if the “best time of year to sell real estate” is just a red herring.

Well, yes and no. While you’re studying the calendar to find that “goldilocks” period to sell your house, there could be a dozen other factors that are driving property values up or down, including:

• Supply and Demand in the Current Property Market: If there is a high number of buyers and a scarcity of properties on the market, prices are going to be driven up regardless of the season or month of the year. That’s why they call it a seller’s market. Conversely, if you’re in a buyer’s market, the number of vendors will be higher, interested buyers will be rarer, and prices will trend lower across the entire calendar.

• Location: Where you buy or sell is more powerful than when you buy or sell. The appeal and reputation of your area, proximity to shops, schools, restaurants, hospitals, and universities, inner suburbs vs outer suburbs, and other location-based factors will drive the price of your property up or down.

• Interest rates: Lower interest rates mean more borrowing power, higher budgets, and higher house prices. Interest rate hikes can slow price growth because sellers are able to borrow less and are willing to spend less on a house.

• Property Features, Size, and Type: Generally speaking, if there are two houses in the same area, the bigger house with more attractive features will sell for more, regardless of the time of year. I’m talking about multiple bathrooms, garages, attractive outdoor areas, and more. It’s also worth considering how appealing your property is based on the features and demographics of your area. Are houses, townhouses, or units selling better in your area? A large, multi-storey home will be more appealing in areas that attract growing families and migrant populations with a focus on multi-generational living. But it won’t be as big a seller in areas with an older population that is focused on downsizing and mobility in the home.

• Property and Land Potential: Investors can drive up the value of your property if they see the potential for easy value-adds. If your property and land are prime for renting, renovating, or developing, you will attract a higher price tag.

• First Impressions and Emerging Trends: Don’t underestimate street appeal, interior design, and the general aesthetics of your property, as these factors can drive interest up or down and adjust the value of your house by tens of thousands of dollars in either direction. Similarly, consider emerging trends that are set to last and how these will affect property value – especially if there is policy momentum behind them. For example, energy efficiency features are an increasingly big ticket item for sellers.

• The State of the Economy: When the economy is thriving there are more people employed, getting pay rises, and looking to improve their living conditions. This can drive up consumer confidence and buyer demand, which has a direct correlation with property prices.

So, Does the Time of Year Have Anything to Do with Melbourne Property Prices at All?

It’s a fair question to ask, and like I said, yes and no.

If interest rates are rising all year and we’re stuck in a period of economic turmoil, property prices are going to be lower all year around.

And your location is your location no matter the date on the calendar. Unless your postcode suddenly becomes more or less sought after, when you choose to sell will only have so much impact.

With all that said, supply and demand are probably the biggest factors that can fluctuate based on the month or season you choose to buy or sell your property. 

When to Sell Your Property? Winter vs Spring

In the battle for seasonal supremacy, winter and spring are often touted as the best times to sell real estate.  

In Melbourne, more properties are listed for sale in Spring than in Winter.

Regardless of the reasons, it’s a basic fact in the residential market – more vendors choose to list in the months leading into Christmas than in any other period. It’s what my data says, and the “Spring Rush” or “Spring Blitz” is a well-known phenomenon in the real estate market.

However, the best month to sell both houses and units in Melbourne is in July, according to research from Swinburne University. July offered the highest prices for sellers – and that’s right in the middle of winter!

So, what’s going on here?

Let’s take a closer look at spring and winter to find out.

Selling Property in Spring – Rationale Plus Pros and Cons

It’s easy to understand the rationale behind selling property in spring.

Melbourne’s cold, dark and dreary winter is on its way out, replaced with refreshing warm weather, light breezes, and blossoming flowers.

For vendors, outdoor areas look their best and more light is pouring into the home. For buyers, the conditions are perfect for attending open houses and gathering outdoors for a hard-fought auction.

And looking at the data, we can see that this is at least partly true. 

As I said, spring is when many people choose to sell, but the demand isn’t necessarily keeping up with the supply. The spring seller’s market often morphs into a buyer’s market because prospective homebuyers and investors can always move on to their next option.

So, the advantage of selling in spring is that it’s an active time in the Melbourne real estate market. Additionally, general weather conditions often mean your house and garden will look great and plenty of eyes will be on your property. If your property has the features to stand out, all these factors might come together to net you a higher sale.

But the busyness of the spring property market is also its major drawback. Supply often ends up outstripping demand as more and more sellers are convinced by real estate agents to take advantage of the spring rush. Plenty of prospective buyers might be out and about too, but with so many other options on the market, they’re not necessarily devoted to buying your home. If your property is a little bit lacking, it could easily get lost in the mix and end up selling for less due to a lack of demand for property compared to the sheer supply.

Selling Property in Winter – Rationale Plus Pros and Cons

If you look at the rationale for selling real estate in winter purely from a “weather” perspective, it can be difficult to understand.

Melbourne’s winters offer colder, shorter, and darker days. In the colder months, our property will be starved of the natural light it needs to display well, and even the best-presented gardens can look more like a swamp in low light after some heavy rains. On top of this, the winter weather seems hugely demotivating for would-be buyers who need to inspect properties and shiver through auctions.

But I’m a buyers advocate and property investment advisor in Melbourne – not a meteorologist. So let’s look at the other side of the winter rationale.

Here are the facts. Serious buyers don’t generally take a ‘holiday’ from property inspections just because the season has changed. Buying property is a time-consuming and stressful process; from securing finance approval to choosing suitable suburbs, attending opens, researching sales, and sharing your contact details with agents. It requires serious commitment.

Because of how time-consuming it can be to buy a home or investment property, Buyer Demand remains broadly the same in winter as it is in spring. However, Supply from Vendors is dramatically less in winter, partly for all the weather-related reasons we just listed.

The results should be intuitive, but unfortunately, they’re not widely known.

I have crunched the data and looked at auction activity across 100+ suburbs in Melbourne over a three-year period.

I compared the Number of Auction Campaigns conducted in Winter Vs Spring as well as the Auction Clearance Rates as a percentage. 

Yes, far more properties are auctioned in spring than in winter – no surprise there. But, interestingly, a higher proportion of auctions are successful in winter than in spring. Why??

Because a lower supply of properties for sale translates to less choice for buyers and hotter competition at auction.

It’s the basic concept of supply vs demand in action, and it’s the very reason why selling in spring can be so fraught.

Simply put, when 10 buyers see only 2 properties for sale that suit their requirements, interest for each property (as shown by auction bidding) will be strong. But, when 10 buyers see 5 properties for sale that suit their requirements, interest will be diluted, and bidding will be less competitive at some or all of the auctions.

When you combine the data comparing auction clearance rates with the statistics that show July nets the highest property sales, you start to see a clear picture of the benefits of selling in winter.

For what it’s worth, I always prefer to sell during winter.

Winter is pretty much the only period where I strongly consider selling my development properties off-the-plan, and would advise my clients to do the same as their property development consultant in Melbourne.

As a buyers advocate, winter is the time that I have to work my network the hardest for off-market and newly listed opportunities.

So, if you’re a vendor thinking about waiting until Spring, there’s only one piece of advice I can give you. Wake up and ask yourself why you wouldn’t want to list when there are fewer competing properties for sale on the market.

You can make your home feel cosy or try to display right when the winter sun hits your windows, but you can’t overcome the mechanics of supply and demand. So, it literally pays to take your competition out of the equation as much as possible. 

What about Selling in Summer and Autumn?

Winter and spring take up so much of the debate that it’s easy to forget that there are two other seasons for selling property in Melbourne.

When it comes to summer, both November and early December can be viable months for selling real estate. But the dead zone in the last week of December is real – with the elephant in the room being the Christmas and New Year period. Following this, January and February are generally good times to start preparing and listing your property in preparation for an autumn sale.

Looking at autumn, it’s fair to say that it’s a bit like spring with a sepia filter thrown over it. Things are cooling down coming out of summer rather than warming up when emerging from winter, and blossoms and greenery are replaced with falling leaves and earthy tones. From a real estate perspective, autumn is busy without being the rush period of spring, so sellers might see some of that “Winter Effect” where buyers have fewer options to choose from, but equally, a few more potential buyers other than the most committed might be drawn to your property.

Other Factors to Consider When Timing the Sale of Your Property

• You need to look at local data when selling your property – including historical information and emerging trends. Commentary about the housing market often makes things look much more macro than they really are. Real property experts know that different areas may tend to favour buyers or sellers at different times of the year. You need to know what your location is doing – down to the postcode.

• Before you list, take a look at the number of listings of homes for sale near you and how many of these property types are directly competing with your own. If there are too few or too many, this could be a sign that now is not the time to sell. Also look at vacancy rates, auction clearance rates, and other important stats.

• The realities of why you are selling should take priority over choosing the best time of year to sell. Whether you’re a homebuyer or an investor, if you’re in a position where you need to sell, there might not be any point waiting.

• Finally, you need to consider all the other factors and forces that can influence market conditions and sale prices, like those mentioned at the top of this article.

What Is the Best Season to Buy Property in Melbourne?

As a buyer, you want a property market where there are plenty of choices and comparatively few buyers to compete with. Once again, winter and spring may be your picks.

Spring is an option for buyers who want to take advantage of the hot “auction season”, where there are rarely enough active buyers to keep up with the properties on offer. You might find yourself outpaced at a few busy auctions, but there will almost always be another option that appeals to you.

Winter is more of a seller’s market where there is a small pool of buyers going to almost every auction. But if you can find a property that suits your needs and the campaign is fairly quiet, there might be a great opportunity to snag a bargain.

Whatever the time of year, the key is to look for those distressed vendors who really need to sell and see if you can take advantage of their willingness to offload their property quickly.

Summary: Is There a ‘Goldilocks’ Season When It’s Best to Buy or Sell? 

There are many reasons why property values rise and fall, so it would be disingenuous to say that the season you buy or sell in is the ultimate deciding factor.

But I will happily tell you that you should never rush into buying or selling real estate when you can afford to stop, think, and analyse your options. 

And for what it’s worth, I’ll reiterate that I often aim to sell investments and off-the-plan developments in winter, when the supply and demand dynamics shift further in the vendor’s favour.

Do you want to find the sweet spot to buy or sell an investment property in Melbourne? My name is Andrew Stone from Property Analytics, and I can help you master the property cycle to secure wealth-generating investments and development sites. 

As your property investment consultant and buyers advocate serving areas like Kew and Ivanhoe, I have an intimate knowledge of the best time and worst time to buy real estate in Melbourne. More importantly, my rigorous, data-driven selection process ensures you target quality properties that can withstand fluctuations in the property cycle and help you achieve your real estate goals.

For more information and to discuss your investment and development goals, please reach out to Property Analytics.