Market Insights

It’s been a tumultuous time for the Australian property market. With rising interest rates, soaring house prices, a lack of supply and an increase in demand, it can often feel like an unlevel playing field for those looking to buy. Despite these challenges, there are still plentiful opportunities for house hunters in Melbourne.

For starters, let’s take a quick look at the previous three years:

2021: Melbourne’s property market witnessed a meteoric rise in 2021, with median prices surging over +17%. 

2022: A turbulent period as home values plummeted by -9.6% from their February peak, according to CoreLogic. 

2023: Momentum shifted significantly compared to the previous year. In November, however, things took another turn as Melbourne property prices declined slightly.

That aside, what’s in store for 2024? Below you’ll find expert picks, predictions and answers to burning questions from a seasoned buyer’s agent in Melbourne. 

A Snapshot of the Current Property Market 

The Australian property market in 2023 surpassed expectations as property prices surged despite rising interest rates. This surge revealed a stark shortage of listings, driven by heightened buyer demand – resulting in price hikes that even seasoned economists found surprising.

Looking ahead, here are some major points that keep resurfacing: 

• Melbourne’s median house price currently sits at around $1,050,000, according to Domain, while its median unit price is close to $570,000.
• Those figures are respectively 4.1% and 5.5% lower than their previous price peak, but are expected to grow in the new year.
• Melbourne house values are tipped to rise between 2% and 3% in 2024 and those of the city’s units are forecast to climb 3% to 4%.

It’s no secret that buying a property in Melbourne has become increasingly challenging. To navigate through these obstacles, having a top buyer’s agent on your side can make all the difference.

What Property Markets in Melbourne Are the Strongest?

While the overall market may have experienced fluctuations due to various factors, there are specific regions within Melbourne that have remained resilient and continue to attract potential buyers.

CBD: The standout market was the City of Melbourne (the CBD and near-city suburbs like North Melbourne and Carlton), which is rising on the emerging national trend of buyers opting increasingly for apartments as a lifestyle choice or an affordability measure. 

City of Yarra: The nearby City of Yarra also had four rising markets (Abbotsford, Clifton Hill, Collingwood and Fitzroy) and two recovering ones among the seven suburbs in the analysis.

The City of Casey: in the far south-east, which previously had many declining suburbs, had three rising and nine recovering suburbs (including suburbs like Doveton, Botanic Ridge, Cranbourne and Endeavour Hills) among 15 suburbs in the analysis of June Quarter activity.

Frankston: The neighbouring City of Frankston was another market showing emphatic signs of recovery.

The Mornington Peninsula, previously a national leader in price growth but past its peak in the past 12 to 18 months, is also showing increasing evidence of recovery, including in the prestige suburb of Sorrento.

The outer-ring municipalities perhaps best illustrated the recovery trend in the Greater Melbourne market. Outer-ring LGAs in the north and west, including Whittlesea, Hume, Wyndham and Melton, also demonstrated the recovering theme in the Melbourne market. The revival trend extended to middle market precincts like the City of Whitehorse, including the suburbs of Box Hill and Burwood East.

What About Vacancy Rates? 

In line with nationwide trends, vacancy rates in Melbourne have remained at record lows, and this trend shows no signs of changing anytime soon. In the real estate sector, vacancy rates refer to the number of vacant properties that are put up for lease. A low vacancy rate, therefore, means that very few properties listed fail to secure tenants.

Over the past few years, Melbourne has experienced a significant increase in population, driven by factors such as job opportunities and a thriving economy. This influx of people has created a high demand for rental properties, resulting in an extremely competitive rental market.

As of the latest data, the vacancy rate in Melbourne’s Outer East is 0.6%. This is welcome news for investors as it means less time from purchasing a property to a new tenant signing a lease agreement.

A low vacancy rate indicates that a property has strong rental sales while a high vacancy rate suggests that a property is not renting well. Areas with a low vacancy rate will ensure a better yield for investors as their properties are less likely to remain vacant after a tenant moves out. 

Population-Driven Housing Demand

In 2024, population growth continues to be a significant factor influencing the housing market, with domain analysis indicating its lasting impact on property prices. Australia’s population increased by 2.2% year-on-year, mainly driven by net overseas migration. Despite the expectation that temporary residents like students wouldn’t directly impact housing demand, their influx has created a ripple effect, increasing demand across various segments of the market. This population-driven demand is anticipated to exceed the current housing supply.

Economists emphasise the necessity of building more houses to address this shortage, highlighting that even if immigration were to halt, there would still be a substantial housing deficit. The national cabinet’s target of constructing 1.2 million homes is seen as crucial in alleviating these pressures created by immigration.

Get More Insights from Expert Buyers Agent in Melbourne

Our buyer’s agents and advocates specialise in the Melbourne property market, analysing trends, measuring the potential for growth and much more. Therefore, your advocate is there to provide expert analysis and support throughout all phases of the investment process in areas like Surry Hills, Kew East, and Doncaster.

The groundwork begins at the pre-selection strategy phase. Here, you will work together to find a suitable location, price range and property type. This often involves the creation of suburb analysis reports. From here, your advocate will generate detailed feasibility reports, deal with external consultants and finally, assist with any aspects of the final handover.

Contact us today to arrange a consultation with a buyer’s agent in Melbourne.

Rental prices have boomed across Melbourne over the last 2 years. The below graph shows overall Asking Rents are up 28% for Units. Melbourne Inner City has increased twice as much.

It wasn’t long ago that many predicted high vacancy rates for years to come. So many cafes, bars, and restaurants were brought to their knees during lockdowns. The vibrancy of our great city was put in question!!

So what has driven the big jump in rental prices? 

Landlord were always going to pass on higher holding costs and taxes imposts when they could. But there are definitely more variables in play.

Overseas migration has been massive. The below graph shows that over 2,000 migrants settled in our city each week last year. Actual numbers were 67% higher than Government projections one year prior. Seriously.

With our population growing faster than ever, you would hope that new building supply is ramping up. It’s not. 

The below graph shows how dire the situation is. Multi-Dwelling Planning activity has fallen off a cliff. Last year, just 16,025 new dwellings were approved across all Melbourne Council Areas.

The systemic Supply-Demand pressures that have led to a Rental Crisis will invariably impact the Sales market across the city. 

More than 70% of the Permanent Migration Program is Skilled based. We’re talking Medicos, Engineers, Professionals… After renting, these new Melbournians will will have the desire and ability to purchase in coming years.

Expect a lot more news and debate about population growth and housing supply in coming months – for good reason.

Darebin is a Council Area in Melbourne’s north that trends pretty closely to overall Melbourne market. The below graph shows when House Prices doubled in value over the last 4 decades.

It’s taken anywhere between 3 to 10 years for prices to double. Three further insights jump out from this graph:

1. Gee it would have been good to have bought a house in 1997 – values doubled twice in the following 12 or so years.
2. It looks like hockey stick growth from 2011.
3. We’ve copped some nasty bumps in recent years.

Another way to view Price Cycles is looking at Year-on-Year % Changes. At any given time, were House Prices higher than the previous year or lower?

Considering the 3 points above.. The mid 1990s were absolutely a great time to purchase given the 15+ years of uninterrupted capital appreciation. 

The % growth from 2011 hasn’t been unusually high. The 1st graph suggests hockey stick growth from 2011 because the $ value levels are so much higher than previous decades (e.g. 15% growth from $600,000 is a lot more in dollar terms than 15% growth from $50,000).

Lastly, in 2018/19 we experienced the sharpest market correction in living memory. Price growth returned for a few years but then 2022/2023 came along!! Price drops are pretty rare, so it’s natural to feel beaten up over the recent topsy turvy market.

Many variables drive market downturns. We’ve highlighted what we think are the major causes in the 2nd graph above: global economic shocks, supply/demand imbalances, government interventions, and interest rate rises.

What to expect in coming years?

For Darebin House Prices to double from September 2000, they need to rise by $1m. That sounds fanciful, but I’m reminded of my wife telling her Dad “You’re crazy for not buying two Houses in 1997 for $100k each!”.

House Price growth will return. I encourage you to consider your finances and get ready to take advantage of the next upswing.

Property investment can be very rewarding, but navigating the Australian real estate market isn’t always a walk in the park. Property investment has its fair share of risks, demands considerable time, and incurs expenses. It’s clear there’s no substitute for expertise, and this is where partnering with the right buyer’s agent can make a world of difference. 

Buyer’s agents are professionals who have an in-depth knowledge of the Australian real estate market and help match investors with their next purchase. Using a wealth of experience and expertise, they take the stress out of searching for a new investment property and simplify the entire process.

In this guide, we’ll explore the pivotal role buyer’s agents play in your property investment journey and why having one by your side can guide you towards success and growth. 

Understanding the Role of a Buyer’s Agent 

Buyer’s agents, also known as buyer’s advocates, are your dedicated allies in the property game. Their primary task? To find the perfect property that aligns with your investment goals. From scouring public listings to uncovering hidden gems off-market, their expertise is your shortcut to a streamlined property search. 

Unlike real estate agents who represent sellers, buyer’s agents solely work in the buyer’s best interest. Their only objective is to identify and secure properties that align with the buyer’s goals, preferences, and budget.

Are you on the lookout for a buyer’s agent in Melbourne? Discover more about the role of a buyer’s agent in real estate and property purchases. 

5 Ways Buyer Agents in Melbourne Add Value to Your Property Investment

With consumer confidence in the real estate market fluctuating, buyer’s agents are more important than ever. Essentially, their role is to protect buyers from potential downfalls and reduce the amount of time invested in researching properties. Buyer’s agents can provide a list of potential investment properties (often based on their expertise and experience), as well as access to exclusive deals and off-market listings that wouldn’t otherwise be available to the public. 

Read on to find out five key ways a buyer’s agent in Melbourne can add value to your property investment. 

1. Expert Market Knowledge

This is one of the main reasons why more and more investors are working with a buyer’s agent. Under this approach, you gain instant access to their unique and extensive knowledge of the local real estate market. A good buyer’s agent will have an in-depth understanding of local property trends, market conditions, and price movements. This keeps them ahead of the game and gives them the ability to help you make informed decisions towards a successful outcome.

Their expertise enables them to offer valuable insights and guidance for informed decision-making, so you are well-prepared to take advantage of investment opportunities. This may include identifying suburbs on the rise, as well as developments with real long-term prospects for growth.

2. Access to Off-Market Properties  

For real estate investors, tapping into off-market properties is one way to secure the best possible investment. These are properties that you won’t find on Domain or realestate.com.au. Using their own personal network and pool of resources, buyer’s agents are in a unique position to provide access to exclusive listings and give their clients the best chance to take advantage of lucrative off-market opportunities.

From individual investors looking for growth opportunities to families searching for a new home, these agents ensure their clients receive the best deals available. By connecting you with this broad range of properties, buyers can have peace of mind knowing they are selecting from the best options available today.

3. Property Research and Assessment 

Property research and due diligence are fundamental to any successful real estate investment strategy. Here, buyer’s agents take the reins and work hard to carry out thorough investigations into the various options available. They also use market data, historical sales figures, comparable property prices, and other relevant factors to arrive at accurate recommendations that fit your goals. This ultimately helps to mitigate risks while still prioritising growth within your portfolio.

Buyer’s agents also bring a keen eye for property assessment. Their experience allows them to evaluate properties accurately to provide you with the necessary insights to make investment decisions that align with your financial objectives.

4. Skilled Negotiation 

Negotiating the purchase of a property is often a complex process that requires specialist knowledge and skill. Fortunately, this is another area where buyers’ agents really kick into gear. In addition to their real estate market analysis, the best buyer agents in Melbourne are also expert negotiators. They have the experience and resources to negotiate on your behalf, and know how to secure favourable terms for you. With their knowledge of the process and understanding of the current market conditions, they can help you make sure that your property investment is a profitable one.

Negotiation is an art, and buyer’s agents are the artists. To learn more about the art of negotiation, take a look at our negotiation blog. Their goal? To ensure you get the best value for your investment.

5. Streamlining the Buying Process 

As we noted earlier, pursuing property investment on your own is far from a walk in the park, even for experienced buyers. From searching for available listings to closing on the final purchase, a variety of legal and administrative steps must be followed for a successful transaction. 

Partnering with a buyer’s agent is one way to streamline the process. This way, they’ll be there to provide invaluable expertise and guidance from the property search to the final purchase. Your agent will provide assistance with everything from searching for properties to reviewing contracts and settlement arrangements, all while respecting your individual budget constraints. 

What’s more, having someone adept in real estate law also comes in handy when spotting potential issues so they can be addressed appropriately and promptly prior to finalising any agreement.

Their experience also helps to guarantee that all deadlines are met, paperwork is submitted correctly, and the entire process is completed as efficiently as possible.

Are Buyer’s Agents Worth It? 

Investing in property can be a complex and time-consuming mission to undertake without the right help. However, with the aid of an experienced buyer’s agent in Melbourne, you can overcome many of the uncertainties and challenges associated with investing in property.

Your advisor’s knowledge and experience will help you to minimise risks and maximise potential returns on your investments. Having access to tools such as cash flow analysis and asset selection services also allows you to make informed decisions that are tailored to your individual needs. Put simply, the road to successful property investment will be much smoother with their support and guidance. 

FAQs About Buyer’s Agents in Melbourne

1. Why should I consider working with a Buyer’s Agent in Melbourne for property investment?
Property investment involves risks, demands time, and incurs expenses. A buyer’s agent simplifies the process with extensive local knowledge, making informed decisions more achievable.

2. How does a Buyer’s Agent add value to property investment in Melbourne?
A Buyer’s Agent provides expert market knowledge, understanding local trends, market conditions, and price movements. They offer access to exclusive off-market properties and deals.

3. What role does property research play in the investment process with a Buyer’s Agent?
Property research conducted by Buyer’s Agents involves in-depth analysis using market data, historical sales figures, and comparable property prices. This approach mitigates risks and prioritises portfolio growth.

4. How does a Buyer’s Agent assist in negotiating property purchases in Melbourne?
A Buyer’s Agent excels in skilled negotiation, leveraging expertise and resources to secure favourable terms. Their understanding of current market conditions ensures the best value for your investment.

5. How can a Buyer’s Agent streamline the property buying process in Melbourne?
Buyer’s Agents guide you through the entire buying process, from property search to contract review and settlement arrangements. Their expertise in real estate law addresses potential issues promptly and efficiently.

Reach Out to an Experienced Buyer’s Agent in Melbourne 

For a smooth property investment journey in Melbourne, consider reaching out to experienced buyer’s agents in Melbourne at Property Analytics. Their valuable assistance and guidance can make a significant difference in your property search and negotiation process.

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.