Market Insights

Buying property is an exciting and significant milestone in life. At the same time, it can be expensive, complex and time-consuming – not to mention risky. A good buyer’s agent in Melbourne can simplify the purchase process, access more properties, and save you big money in the long run.

Buyer’s agents, as the name suggests, are professionals who aid buyers in securing a suitable property with a fair price to match. With their finger firmly on the pulse, they provide objective information, advice, and support throughout the buying process. Their expertise lies in tracking a property’s sale price and history, as well as monitoring its time on the market.   

Throughout this article, we’ll further explore the role of a buyer’s agent and how they can assist you with real estate and property purchases.  

What is a Buyer’s Agent and Why Should I Consider One?

If you’re unsure if a buyer’s agent is the right move for you or if you even need one, consider the following questions: 

• Are you overwhelmed by the process of buying a property? 
• Are you unfamiliar with certain aspects of the property market? 
• Are you unsure of the true market value of a property? 
• Are you time-poor and unable to research and view properties? 

If you’re shouting ‘YES’ to any of these, enlisting the help of a buyer’s agent might be the smart choice to simplify your property purchase. 

What is a Buyer’s Agent?  

By definition, a buyer’s agent (also known as a buyer’s advocate) is a licensed real estate professional who specialises in working exclusively on behalf of property buyers. They act as your personal property advisor, guiding you through the entire process of buying real estate. Their main goal is to represent your interests, making sure you follow informed decisions and secure the best possible property at the right price.

What Does a Buyer’s Agent Do?

A buyer’s agent can offer numerous services including researching properties, arranging pre-settlement inspections, and tracking down recent sales figures. They also negotiate directly with their network of sellers and their agents to encourage the best possible outcome. 

In addition to providing advice on a property’s fair market value, a buyer’s agent can also provide advice on financing options, loan terms, and related costs of purchasing a property.

What a Buyer’s Agent Doesn’t Do

Buyer’s agents do not sell properties. They represent property buyers to secure you a quality property with great prospects on the best possible terms.

By understanding this distinction, property buyers can confidently place their trust in buyer’s agents across Melbourne knowing that their exclusive focus is on achieving the best outcomes for buyers without any conflicts of interest tied to property sales. 

Why Should I Consider Teaming Up with a Buyer’s Agent?

A Buyer’s agent by your side can provide numerous advantages, particularly in the Australian property market:

• Expertise: Buyer’s agents in Melbourne have in-depth knowledge of the local market, including current property trends, pricing, and neighbourhood insights. This expertise can save you time and money.
  
• Time-Saving: Searching for the ideal property can be time-consuming and fruitless. A Buyer’s agent takes the legwork out of the equation, allowing you to focus on your day-to-day.
  
• Negotiation Skills: One of the key roles of a buyer’s agent is negotiating on your behalf. Their skills and experience can help you negotiate the property purchase price down more than you think!
  
• Access to Off-Market Properties: Buyer’s agents often have access to off-market properties that are not publicly listed. This can give you a competitive edge in a tight market.
  

At Property Analytics, we’re on your side. We’re seasoned buyer’s agents in Fitzroy and across Melbourne with years of experience and local knowledge behind us. 

Understanding the Role of a Buyer’s Agent

Now that you understand why hiring a buyer’s agent can be beneficial, let’s delve deeper into their role and responsibilities.

The Search: Finding the Ideal Property

The first step in the journey with your buyer’s agent is the property search. This involves discussing your preferences, needs, and budget. Based on this information, the buyer’s agent will curate a list of potential properties for you to consider. They have access to a wide range of resources, including databases, industry contacts, and market insights, which allows them to identify properties that match your criteria.

This search process can save you from the overwhelming task of sifting through countless listings and conducting endless property inspections. Instead, you can focus your energy on properties that truly align with your goals.

The Evaluation: Assessing Property Value and Potential

Once potential properties are identified, your buyer’s agent will thoroughly evaluate them. This evaluation involves analysing property data, recent sales in the area, and the condition of the property. They will assess the property’s value and potential for growth, leaving no stone left unturned. 

This step is crucial, as it means you are not overpaying for a property and that it aligns with your long-term investment goals. Buyer’s agents are skilled at identifying both the hidden gems and potential pitfalls that might not be apparent to the untrained eye.

The Negotiation: Securing the Best Price

Negotiation is where the expertise of a buyer’s agent truly shines. They will negotiate with the seller’s agent on your behalf, striving to secure the property at the best possible price. Their knowledge of the local market, recent sales data, and negotiation skills can be invaluable in achieving a favourable outcome.

Additionally, buyer’s agents for Melbourne properties can help you structure your offer in a way that increases your chances of acceptance. This might involve including special conditions or terms that benefit you as the buyer.

What Makes a Good Buyer’s Agent?

Not all buyer’s agents are created equal, and choosing the right one is paramount to a successful property purchase. Here are some key qualities to look for in a buyer’s agent:

Qualifications and Experience

Confirm that your buyer’s agent is a licensed and accredited professional with a strong track record. Experience matters, as it equips them with the knowledge and skills needed to navigate the complexities of the real estate market effectively.

Knowledge of the Local Market

Local market knowledge is valuable, as property markets can vary greatly from one suburb to another. Your buyer’s agent should have an in-depth understanding of the specific areas you are interested in, including market trends, property values, and local amenities.

Strong Negotiation Skills

Negotiation is a critical aspect of an agent’s role. Look for a buyer’s agent who has a proven ability to negotiate favourable deals on behalf of their clients. They should be able to remain composed under pressure and advocate for your best interests.

The Buyer’s Agent and the Investment Property Market

For property investors, a buyer’s agent can be an invaluable asset. Investing in real estate involves significant financial commitments, and making the right choices is paramount to achieving your investment goals. A buyer’s agent can assist investors in several ways:

• Market Analysis: They can provide comprehensive market analysis to identify investment opportunities with the potential for strong returns.
  
• Risk Mitigation: buyer’s agents help investors minimise risks by conducting thorough due diligence on properties, ensuring they align with the investment strategy.
  
• Portfolio Building: Over time, a buyer’s agent can assist in building a diverse and profitable property portfolio.

How a buyer’s agent Can Influence Your Investment Decisions

Buying a home or investment property is about as nerve-wracking as it gets. Buyer’s agents can influence your investment decisions positively by providing expert advice and access to exclusive opportunities. They can help you identify properties with growth potential, guide you in making informed decisions, and ensure you purchase properties that match your investment strategy.

Investing in property can be a lucrative venture, but it’s not without risks. Having a buyer’s agent by your side can significantly increase your chances of success in the competitive world of property investment.

Are you over the emotional rollercoaster that comes with the buying process? You can seek professional advice from our buyer’s agent serving Melbourne and surrounding suburbs. 

The Financial Implications of Hiring a Buyer’s Agent

It’s important to understand the financial aspect of engaging a buyer’s agent in Melbourne. Typically, buyer’s agents charge a fee, which can be structured in different ways:

1. Flat Fee: Some buyer’s agents charge a flat fee for their services. This fee is agreed upon upfront and is not dependent on the property’s purchase price.
   
2. Percentage of Purchase Price: Others charge a percentage of the property’s purchase price, often ranging from 1% to 3% of the property’s value.
   
3. Combination: In certain cases, a buyer’s agent may use a combination of a flat fee and a percentage of the purchase price.
   

Assessing the Value: Is a Buyer’s Agent in Melbourne a Good Investment?

Whether you’re buying a home or an investment property, the decision to work with a buyer’s agent should be based on your specific circumstances, experience, and preferences. If you value expertise, time-efficiency, and a smoother purchasing process, the benefits of hiring a buyer’s agent in Melbourne may well outweigh any associated costs.

For the sake of ethical conduct, it’s vital to uphold transparency in all transactions. If you decide to work with a buyer’s agent, discuss their agency relationship with you. This will help you gain a clear understanding of their obligations so your interests are appropriately represented.

Frequently Asked Questions About Buyers Agents in Melbourne 

How does a buyer’s agent get paid?

Buyer’s agents are typically paid a fee for their services. This fee can be a flat fee, a percentage of the purchase price, or a combination of both. The payment structure is usually agreed upon in advance between the buyer and the buyer’s agent.

Should I hire a buyer’s agent or a real estate agent?

A buyer’s agent exclusively represents buyers, while a real estate agent can represent both buyers and sellers. If you want someone who will advocate solely for your interests as a buyer, a buyer’s agent is the better choice. Real estate agents, on the other hand, may have a dual agency relationship, which could present a conflict of interest.

Is it necessary to hire a buyer’s agent?

Hiring a buyer’s agent is not mandatory, but it can be highly beneficial, especially in complex and competitive real estate markets like Australia. If you value expert guidance, time-saving, and effective negotiation, a buyer’s agent can make the property buying process smoother and more efficient.

As a trusted buyer’s agents for Fitzroy, Preston and beyond, we’ve prepared a list of everything property dos and don’ts.  

Can a buyer’s agent represent the seller?

No, a buyer’s agent’s primary duty is to represent the buyer’s interests. Their role is to assist buyers in finding and purchasing properties that align with their needs and goals. They do not typically represent sellers in real estate transactions.

Get in Touch with a Buyer’s Agent in Melbourne Today

A buyer’s agent exists as an invaluable partner in your real estate and property investment journey. At Property Analytics, our Melbourne Buyer’s Agents bring expertise, market knowledge, negotiation skills, and access to off-market opportunities to the table. Reach out to get timely market insights, for general advice, or to arrange a one-on-one consultation.

Take a quick glance at the Melbourne skyline and you’ll notice it’s dotted with towering apartment buildings. 

It’s easy to get drawn into the idea that investing in these high-rise complexes is the ticket to boosting your property portfolio.

However, amongst all the hype and initial affordability of investing in an apartment in Melbourne, it’s important to be aware of the potential risks involved.

Negative equity, cramped floor plans, sky-high body corporate fees, sluggish capital growth, and pitiful rental yields; all of these are issues that can take a serious toll on your bottom line when it’s time to sell, and most of them are quite difficult to fix.

At Property Analytics, we know that long-term wealth is best created through asset appreciation, not through positive cash flow. Our best advice for clients is to purchase a property that will historically grow most in value over time. 

It All Starts With Your Objective: Positive Cash Flow vs. Negative Gearing

Some people invest in property to increase their monthly income, whereas others invest in property to build long-term wealth. One group looks for ‘positive cash flow properties’, the other for ‘negative geared properties’.

Put bluntly, you’re making a huge mistake if you buy an investment property for positive cash flow (where rental income is greater than mortgage payments and expenses). Instead, buy an investment property that is likely to grow in value – you’ll be far better off for it. 

I advocate for investing in houses over apartments for a number of reasons. The main one being that houses have the potential for value growth, leading to greater returns in the long run. This means that even though you might be sacrificing a bit of cash flow now, you’re setting yourself up for the future.

Want more insider advice from expert buyer’s advocates in Melbourne? Dive deeper into capital growth vs. rental yield here.

The Upsides and Downsides of Investing in Apartments

Apartments in Melbourne City and surrounding areas have been gaining traction among property investors, and it’s easy to see why. Melbourne has been ranked as one of the world’s most liveable cities, making it an attractive destination for both local and international buyers.

An apartment could be a great buy if you’re solely focused on a rental yield strategy. With the right features and the right location, you could attract a steady supply of high-paying renters.

However, if you’re placing capital growth first, steer clear of investment properties in the form of apartments. Oversupply and lack of demand result in less property price growth, restricted finance options, and risky business for investors prioritising capital growth over rental yield.

Successful property investors generally don’t favour apartments, for the following reasons: 

1. Oversupply and Limited Demand:

Melbourne’s apartment market has been plagued by oversupply, which has resulted in reduced property price growth. Essentially, the abundance of available apartments has created a competitive market where demand is insufficient to match supply. As a consequence, apartment values may stagnate or even decline.

2. Restricted Finance Options:

Lenders often perceive apartments as riskier investments due to potential issues with quality, oversupply, and market volatility. Securing finance for apartment purchases can be more challenging compared to houses. Limited financing options, therefore, could be a major roadblock. 

3. Higher Risk for Investors:

Apartments generally have higher ongoing expenses such as body corporate fees, maintenance costs, and sinking fund contributions. If this is the case, additional expenses can eat into your rental income and erode your overall returns. The potential for market fluctuations and changes in apartment regulations adds an extra element of uncertainty and risk.

The Case for Investing in Houses

So, what does this mean for you as a smart, future-focused property investor? It means that apartments can enter high-risk territory if you’re pursuing a capital growth strategy. Instead, consider investing in houses. Let’s explore why. 

Houses as a Growth-Oriented Investment:

While houses may not offer positive cash flow initially, their long-term potential for capital appreciation is significantly higher compared to apartments. Houses are in higher demand due to their larger living spaces, land component, and potential for expansion or renovation. Investing in a house with good growth prospects can lead to substantial wealth creation over time.

Stronger Asset Value:

Houses typically hold their value better than apartments, especially in desirable locations with limited land availability. Land appreciates in value, while buildings tend to depreciate. By investing in a house, you are acquiring not only a dwelling but also a valuable asset with the potential for long-term value growth.

More Flexibility and Control:

Overall, houses offer greater flexibility in terms of rental arrangements. You can choose between long-term leasing or short-term rentals like Airbnb, allowing you to adapt to market conditions and optimise rental income. As an added bonus, as the property owner, you have more control over renovations, modifications, and maintenance, enhancing the property’s value and appeal.

Mitigating Risks in House Investments: Research and Due Diligence

Investing in houses requires a long-term perspective. Property values tend to appreciate over time, and by holding onto your investment property, you can benefit from capital growth and the potential to generate substantial returns upon resale.

Consider factors such as location, proximity to amenities, infrastructure developments, and the potential for future growth. Conducting due diligence on the property’s condition, legalities, and rental demand will also help to mitigate the risks and ultimately, make for a sound investment.

Maximise Your Return: Tips for Investing in Melbourne Houses

1. Location:

Always prioritise properties in desirable locations that are close to public transport, employment hubs, and lifestyle amenities. This will help ensure consistent demand and strong rental yields.

2. Research the developer:

Investigate the track record of the developer and the quality of their previous projects. This could be crucial in determining the long-term appeal and value of your investment.

3. Get to know the area:

Before purchasing a house, research the local rental market to ensure you’re investing in an area with strong demand and potential for growth.

Always remember to be as analytical and objective as you can when considering your next investment property. Here’s some advice from our buyer’s advocates in Melbourne. 

Determine Your Preferences: Finding the Perfect Melbourne Property Investment

What features should you look for in a Melbourne house? There are several factors to consider to ensure you make the right choice. First, think about the size of the house you’d like to invest in. Are you after a comfortable two bedder or a spacious double-storey townhouse? 

Consider the needs of your potential tenants and how much rental income you’d like to generate. By having a clear understanding of your preferences, you can narrow down your search and find a house that meets your investment goals.

Let’s take a look at several important factors including: location; size, layout, and design; building amenities; affordability; and finally the future of the suburb.

Location, Size and Layout 

Location is vital to the success of your investment and can be divided into two trains of thought. Firstly, look for properties close to employment hubs, schools, and public transport, ensuring a steady demand from potential tenants. Secondly, focus on houses that offer unique features or amenities that set them apart from the competition. This could include a balcony with a stunning view, or a backyard big enough for an entertainment deck. 

When exploring your options, remember to think about important factors such as size, storage space, bedroom and bathroom layout, living area, and how much natural light you’ll get. 

Affordability and Budget Constraints

The current housing market in Melbourne offers a range of prices for various types of houses in different locations. By conducting thorough research and working with a real estate agent, you can find a house that fits your budget and investment goals.

As with any investment, it’s essential to stay within your budget while still identifying properties with potential for growth and strong rental returns. Get to know the current Melbourne housing market and familiarise yourself with the price ranges for different types of houses in various locations. Don’t be afraid to explore up-and-coming suburbs, as they may offer more affordable options with the potential for significant growth. Keep in mind that while affordability is important, it should not come at the cost of quality or location.

Future of the Suburb

Another consideration is the future of the suburb itself. You may want to consult with a real estate agent or local council about planned developments in the immediate vicinity of the house you plan to purchase. For example, a large planned development next door to the building where you plan to buy could block out your view, and potentially lower your resale value if many more similar properties end up on the market.

On the other hand, an infrastructure project like shops or a cultural precinct could make the lifestyle in a particular suburb more appealing, and potentially improve the resale value of your house.

For the best advice on investment properties, development projects, and market insights, get in touch with the seasoned experts at Property Analytics.

Do Houses Appreciate in Value in Melbourne?

Historically, houses in Melbourne have experienced steady capital growth compared to apartments. However, the rate of appreciation depends on a variety of factors, including location, market conditions, and individual property attributes. By carefully considering these factors and making well-informed decisions, it’s possible to find house investments in Melbourne with strong growth prospects. Remember to weigh the potential rewards against the inherent risks to make the best choice for your investment portfolio.

Take it from the preferred buyer’s advocates in Melbourne. You can learn more about our property dos and don’ts here: 

What are Melbourne’s Most Liveable Suburbs on the Real Estate Market?

To most, a suburb’s liveability is a high priority. You may seek out areas that have the best to offer in terms of amenities and lifestyle. According to RMIT’s 2022 Social Infrastructure Index – which rates suburbs according to factors like access to services like health, education and community centres as well as access to sport and recreation – the top ten most livable suburbs in the Greater Melbourne area are:

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

To chat more about the growth potential of Melbourne’s most liveable suburbs, get in touch with the number one buyers advocate in Melbourne: Property Analytics.

The Better Bet: Houses Over Apartments

When it comes down to the crunch, short-term gain often pales in comparison to long-term wealth accumulation.

Investing in Melbourne apartments for positive cash flow can be a risky venture due to oversupply, limited demand, and financing challenges.

On the other hand, houses provide greater potential for long-term wealth creation through capital appreciation. While sacrificing immediate positive cash flow may be necessary, the growth-oriented nature of houses makes them a more favourable choice for property investors seeking sustainable returns. 

Yes, investing in a house generally means that the rent won’t cover the mortgage (i.e. you’ll have to tip in your own money each week). But, if you’re able to sacrifice a bit of cash flow, you’d be far better off in the long-term.

And, of course, always enlist the help of a knowledgeable buyer’s advocate in Melbourne like Property Analytics.

Your Trusted Local Property Development Consultants in Melbourne

Looking for expert guidance in buying a property? Property Analytics is here to help. As reputable buyer’s advocates and property development consultants in Melbourne, we offer our expertise in various suburbs, including Templestowe Lower, Bulleen, Fitzroy, and Ivanhoe. Whether you’re searching for a dream home or an investment opportunity, our dedicated team of buyer’s advocates in Melbourne will assist you every step of the way.

Smart property investment is about creating long-term wealth.

Put simply, you want the properties you purchase to increase in value as much as possible over time. If you’re serious about property investment, your strategy should focus on capital growth rather than rental yield. However, many of the key concepts mentioned in this article apply regardless of your property investment strategy.

So, what are the key things you need to look for in an investment property in order to achieve the maximum possible asset appreciation over time?

Just some of the factors I will discuss in this article include:

• Location
• Nearby Gentrification
• Demand of Design
• Structural Integrity
• Value-Add Opportunities

Capital Growth, Rental Yield, and the Ideal Investment Property

Investment properties are all about wealth creation. It’s as simple as that. 

You want to come out the other side richer than you were before, and ideally, you want to be in the best position to make your next investment move.

The main methods for generating a financial return through investment properties are rental yield and capital growth.

Rental yield is usually expressed as a percentage, and it represents the money you make from your rental property (rental returns) compared to the value of the property. When looking at net rental yield, you also need to factor in all your costs, including loan repayments, council rates, home insurance, property management fees, water rates and other utility rates, and even body corporate fees, if applicable.

If you are aiming to generate rental income, it’s important to purchase a property in an area with high rental demand.

But rental yield is not the main investment strategy I recommend to my clients.

If you really want to get serious about property investment, you want a property (and land) that will increase in value over time (capital growth/capital gains). And by extension, you want a property that you can easily add value to through smart property development.

Any real estate buyers agent or property investment advisor in Melbourne who is worth their salt will tell you that this is the best way to supercharge capital growth.

These 9 Features Make the Ideal Investment Property 

There are plenty of reasons why property investors choose real estate investing. It is traditionally less volatile than other investments and it gives you something you can see and touch. However, there are risks and ongoing costs to consider, no matter which wealth creation strategy you go with.

What’s the best way to boost the capital growth of your investment while navigating these risks? There’s a lot involved in the process but choosing a property with the following facts in mind is a great place to start. 

1. First and Foremost, It’s about Location

Where your property is located will have the most bearing on future capital growth. As a successful property investor, you need to look at the location on an area, suburb, and neighbourhood level.

Anyone can tell you to look for properties near restaurants, shops, and in good school zones – and these are important factors to consider.

But here are a few more specific location characteristics I think you should look for.

Consider the location of Hospitals and Universities. 

Why? The biggest and fastest-growing industries in Victoria are Health and Education. Healthcare professionals like doctors, nurses, surgeons, and specialists, are paid well; they have great job security, and they are in a growing industry.

The same can be said for Education professionals like deans, professors, and researchers. Investing in areas that are popular with Health and Education professionals will pay off in the long run.

People have always preferred to live close to where they work, and as infrastructure throughout Melbourne fails to keep up with population growth, proximity to work will become increasingly important. A huge proportion of good-paying jobs will always be found in the CBD, so think about triangulating Hospitals, Universities, and Train Stations when looking for suitable areas.

Back on the topic of schools, my data tells me that state secondary school zones have long been important in driving capital growth. However, primary schools are also becoming an increasingly important consideration for purchasers. And, of course, don’t limit yourself to just looking at state schools – have a look at Independent and Catholic schooling options as well.

Finally, it’s worth noting that price growth in capital cities is historically much greater than in regional areas, so if you’re investing in Victoria, it might be best to stick to Melbourne.

2. The Job Market Can Also Give You Insights Into Where To Buy

I’ve just mentioned that proximity to places of work (such as Hospitals and Universities) and ways to get there (such as Train Stations and other public transport) are key factors in finding a worthy investment property.

But you can also look at the property market more broadly to identify locations with plenty of nearby employment opportunities. Areas with a growing jobs market can be great for capital growth, and they can also help with rental demand if this is the path you choose to go down.

On that note, it’s also worth keeping an eye on major companies that are moving into an area, as this can send property prices up.

Once again, good-paying jobs are the number one target.

3. We’ve Talked about Where, but What About the Types of Property You Should Invest In?

There are plenty of property types out there, but what should you invest in? Family homes? Townhouses? Empty blocks? Off-the-plan properties? What about apartments? (Not likely!)

As your buyers advocate in Bulleen, Templestowe and across Melbourne, here are the three main property types I secure for my highly successful clients:

1. Townhouses: When backed by quality design and construction, as well as proximity to amenities and infrastructure, townhouses can be a good source of rental income, capital growth, and depreciation tax benefits.

2. Established homes: As well as block size and location, some of the features to look at when choosing established houses are zoning restrictions, orientation, and shape of the property and the block.

3. Blocks with future development potential: Even if you don’t intend on developing, buying a property or block of land with development potential will almost always be better for capital growth. If you do wish to develop, I can guide you in building duplexes or multiple townhouses. I can even track down opportunities where a development project is already fully approved and ready to start building – profits are often tighter but you can go to market sooner.

The decision on which type of property to invest in will also be driven by your budget and the location you’re looking to buy in, but I’ll get into this more in the points below.

4. Look for Widespread Gentrification as a Sign of Future Prospects in the Neighbourhood

I love seeing new developments going up near where I purchase, because that indicates confidence in the area, and suggests strong demand from buyers. After all, why would property developers create supply if there weren’t buyers to purchase?

I particularly like seeing old houses knocked down and replaced by large, single dwellings. When someone knocks down a house and replaces it with one brand new one, they usually overcapitalise (i.e., they spend more on the purchase and build than what they could sell for immediately upon completion). People are only willing to overcapitalise when they plan on being in a property for a long time, and they only plan on being in a property for a long-time if they love the area and have confidence in its future.

Beyond that, look for real estate renovations and extensions, and also keep an eye on other future developments. New playgrounds and other council projects are a great sign, and you can also look to see if the local shops are quality and/or improving. A lot of construction work now might seem off-putting, but not if it’s going to become infrastructure and amenities that boost the prospects of your location.

Another thing to look for is whether the neighbours are taking pride in their properties. If the neighbourhood and streets feel like they’re on the up, then prices will likely follow.

5. Looking at Vacancy Rates and Average Rent Can Be Insightful (even if you don’t plan on renting)

Rental vacancy rates and average weekly rent are clearly useful stats if rental yield will be an important part of your investment strategy. An area with a high vacancy rate is a red flag for anyone looking for regular rental income, while low vacancy rates may indicate a more competitive area, but also the opportunity to generate more rental income if you can enter the market.

If you’re not planning on renting out your investment property, high vacancies or falling rental prices may also indicate a neighbourhood in decline (or vice versa for increasing rental prices and lower vacancy rates). 

6. Does the Design of the Property You’re Considering Match the Demand from Buyers?

This is where a lot of investors can go wrong and end up buying the wrong property…

If the main drawcard in the local area is a very popular secondary school, then the strongest demand will come from young and middle-aged families. So, by extension, 3-bed+ houses will be most popular.

Then, why are you considering purchasing a modest 2-bedroom, 1-bathroom home on a small block of land?

If the property is in an affluent area, with a lot of wealthy older people, then chances are that the greatest future demand will come from people looking to downsize and stay in the area. These buyers want quality, and absolutely require a downstairs master bedroom and reasonable living spaces.

Then, why are you looking to purchase a poorly renovated property on a sloping block, with all bedrooms upstairs?

As you can see, when I talk about the design of the property, I’m not just talking about Victorian vs Federation, vs Contemporary. It’s the features of the property – and the land component – that make or break your investment.

Depending on your location, other features that might be important include garage space or extra bathrooms. With the recent seismic shift in workplace culture, space for a home office for working from home will also become more of a big-ticket item in some areas. 

Always think about who lives in the area you’re looking at, why they choose to live there, and what they will demand in properties moving forward. This will have a great impact on future capital growth and rentability.

7. The Structural Integrity of the Property Is Hugely Important in Avoiding Future Large-Scale Expenses

Look at the condition of the roof, gutters, and downpipes. Get under the house to assess its footings and look for signs of damp. When walking around inside, look for any water damage on the ceilings, on window frames, and in the corners of bathrooms.

Are there signs of structural movement like large cracks in plaster, bouncy or uneven flooring, or doors that won’t close properly? How old do the windows look? All of these things can prove incredibly costly to repair and fixing them won’t necessarily increase your property value.

Look past the cosmetic changes that may be required and focus on the structural elements in order to avoid future expenses.

8. Keep An Eye on the Age of the Property

Age isn’t everything when it comes to investment properties, but it is important. 

Older properties won’t always be a money drain, and newer properties aren’t always well-made or properly cared for. Making sure your potential property doesn’t have structural issues like the ones listed above is most important. 

It’s also worth thinking about how easy or hard it will be to add value to the older property you have your eye on, regardless of how structurally sound it is.

Another way an older property could affect your investment strategy is through depreciation. Basically, depreciation is the decrease in the value of your property and/or its contents (or plant items) over time. In some cases, you can claim these losses as tax deductions, but the age of your property can affect its depreciation schedule. 

9. Smart Investors Look to Add Value Proactively

A rule of thumb to follow with renovations: every $1 you spend should increase the property value by $3.

Would you pay an extra $60k on a property because the owner spent $20k on replacing the roof tiles and gutters? Not bloody likely.

But would you spend an extra $45k for a new kitchen, with glass splashback, stone benchtops, a new oven, stovetop, rangehood, etc? If updated tastefully, then yes, you probably would.

The best Return on Investment is gained from updating wet areas – kitchen, bathroom, and laundry. I’m a big fan of ripping up carpets and polishing the floorboards underneath to give a feel of modernity. A new lick of paint throughout the house freshens things up dramatically.

A few overlooked areas that always have a surprisingly big impact on price are lighting, landscaping, outdoor living, and window coverings (blinds or curtains). These areas can often be upgraded at a minimum expense.

Never underestimate the importance of first impressions – improving the streetscape is absolutely mandatory if you’re looking to alter value expectations (from buyers and from the bank).

The other route you can go down to value-add is full property development. Buying an occupied or unoccupied block with development potential could lead to the maximum possible capital growth if handled correctly. Of course, there is a lot you will need to consider, including council restriction, zoning constraints, end purchaser demand, design options and property types, and all costs, to name just a few.

As your property development consultant in Melbourne, I can help you find the perfect property for development, secure it for a great price, and put everything in place so you’re ready to start building.

The Next Step to Take for Anyone Looking for An Investment Property

There’s obviously a lot more to property investment than the 9 points listed above but following the above list will go a long way to ensuring that your investment property performs well over the long term.

My name is Andrew Stone, Director of Property Analytics and an experienced buyers agent serving Ivanhoe, surrounding areas, and all of Melbourne. My team and I harness proprietary data and market research, as well as years of real-world experience, to secure profitable residential investment properties and development projects in Melbourne.

As your trusted partner, I can help you find the right investment for the right price, and if you want to develop, my team and I can manage everything to put you in a position where you’re ready to start building approved and profitable properties. 

For a one-on-one consultation or general property investment advice, reach out today.

The most common question we get as Real Estate Analysts is – How’s the market going? When people ask this question, invariably what they’re asking is:

What are Melbourne House Prices doing?

In the short video below, we explain how to understand the most important graph that we track.

This Melbourne House Price graph shows four key metrics:

1. Sales Volumes
2. Monthly Median $ House Price
3. Rolling 3 Month Median $ House Price
4. Rolling 12 Month Median $ House Price

What do monthly house sale volumes tell me?

You want to be mindful of the number of sales considered, because when there are low sales volumes, the monthly price figures are less reliable.

Sales Volumes fluctuate seasonally. The number of houses sold typically peaks in late Spring, in October-November. Very few properties are listed for sale immediately following this period, so January typically sees very few sales, and the houses that sell in January are usually those that have languished on the market – sellers are more likely to accept a discount on their initial asking price. The market comes back to life in February and then ticks along until Spring approaches again.

What do Melbourne Monthly Median $ House Prices tell me?

Monthly Median $ House Prices naturally fluctuate quite a bit from month-to-month. Unfortunately, many in the media latch on to these dramatic changes as an easy way to get clicks.

It’s important not to over-interpret short-term changes in monthly results. String a few months together though, and you can get a good feel of emerging trends. Look at the significant change in the Monthly Median $ House Price from March to April 2020. While no credible Analyst pointed to it as a statistically significant change at the time, in retrospect, the drop was likely a COVID-induced market correction. When viewed retrospectively, they can be useful in identifying turning points in the market (e.g. previous peaks and lows).

We’re always really interested in the current monthly median – whether it’s up or down – but we interpret things with a grain of salt.

What do Melbourne Rolling 3 Month Median $ Prices tell me?

Rolling 3 Month Median $ House Prices smooth out the dramatic fluctuations seen month-to-month, and are useful for identifying emerging trends quickly.

Analysing Monthly and Rolling 3 Month Median $ House Prices together can be very informative. Look at the middle of 2019. The Monthly Median bottomed out in July, and then rose significantly in the months following. As we moved into September, it was clear to us that the market was rebounding and we encouraged our clientele to look seriously at some good buying opportunities.

What do Melbourne Rolling 12 Month Median $ Prices tell me?

The third way that we measure prices is by Rolling 12 Month periods. It is a slow-moving, conservative way to assess the market. While this method is not very useful for identifying emerging trends, it can provide some important historical context to people’s thinking.

This is figure that most responsible analysts reference when they talk about year-on-year % changes in median $ prices.

Are prices up, down, or sideways? And, of course, what does that mean for my property?

It’s safe to say that prices jumped dramatically through 2020 and 2021, before decreasing through 2022. Keep an eye on the Monthly and Rolling 3 Month Median $ Price trends to identify potential emerging trends in the market.