Melbourne has a new hitlist for investors, but with 16 per cent losing money on a sale last year — experts have warnings over some home types.
Property investors are making a comeback for Victorian homes, accounting for a third of new loans across the state in the past year.
But 16 per cent of those that sold in the same time frame lost money, and it’s likely many looking to buy this spring will be going head to head with Melbourne’s battlers and first-home buyers after some of the city’s most affordable pockets were named its best bets for investors.
The PropTrack Terri Scheer. Investor Report tipped ten suburbs with median house prices at or below $800,000 as the best bet for investors looking in the Victorian capital this spring.
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The almost 100 Melbourne suburbs where house or unit prices have fallen since 2020
The list is headed by houses in Cranbourne South, Meadow Heights and Coolaroo.
Each has recorded a mix of above average rental returns and at least 9.5 per cent median price growth in the past year.
For units, the top picks were Notting Hill, Sunshine and Broadmeadows.
The report notes that with Melbourne relatively more affordable than other major capitals now it may attract increased investor interest in the near future.
4 Venetia Way, Cranbourne South, was listed for sale at $780,000-$850,000 — but is now under contract.
14 Pinus Place, Meadow Heights, has a $610,000-$640,000 asking price in one of the city’s best suburbs for investors, based on rental returns and price growth in the past year.
But while the PropTrack report found 84 per cent of investors across Victoria sold at a profit in the past year, 16 per cent did not.
The national average was just 10 per cent selling for a loss.
REA Group senior economist Angus Moore said the reason for the losses was largely tied to Melbourne’s housing market struggling for two of the past three years leaving those who had bought in 2021 or late in 2022 more at risk of a deficit.
“It was only in the past month that Melbourne returned to peak prices, so those who bought before 2022 have had that risk of selling for losses,” Mr Moore said.
He added that one of the few areas to continue performing during the timeline was the more affordable end of the market, which was why the current investor hotspots were dominated by more reasonably priced suburbs.
Real Estate Buyers Agents Association of Australia Victorian representative Matthew Scafidi said in many instances the 16 per cent of investors losing money would be those who had bought into high volume apartment complexes.
However, Mr Scafidi added that others would also have bought at the peak of the market when interest rates were far lower than today and could not hold onto them — or in some cases would have paid a premium for a property that could suit development, only for surging building costs to make those properties less valuable.
8/210-220 Normanby Rd, Notting Hill, is for sale at $300,000-$315,000 — in Melbourne’s best blend of rental returns and price growth for units.
3/7 Lorraine Court, Sunshine, has a $560,000-$610,000 asking price that is likely to appeal to both first-home buyers and investors.
Despite this, he said close to 30 per cent of his clients today were interstate investors — and many would be targeting homes that needed a bit of work done on them, making it more likely they’d seek affordable options and compete with first-home buyers.
Mr Moore added that it was likely a tight rental market that had continued for a number of years was behind investors now making up a “substantial share” of new lending.
“With markets expecting at least one further rate cut by the Reserve Bank and challenging rental market conditions persisting, strong investor activity is likely to continue over the rest of this year and next.” Mr Moort said.
Terri Scheer executive manager Carolyn Parrella said the current conditions “could present a lucrative opportunity for property investors”.
PropTrack economist Angus Moore said Melbourne sellers taking a loss was likely caused by home values falling for a number of years, and only just recently returning to peak levels.
The investor report also found that one in seven Australians own a rental property, with about two-thirds of the nations investors owning just one home — and 20 per cent owning two.
About 12 per cent owned three or more.
It also found that the biggest investor group in Australia are those aged 55-64, while the nation’s top 20 per cent of income earners own almost 30 per cent of investment properties.
Melbourne’s top suburbs for investors (houses)
| Suburb | Median sale price | Annual median growth | Rental yield |
| Cranbourne South | $800,000 | 9.50% | 4.30% |
| Meadow Heights | $638,000 | 10.00% | 4.50% |
| Coolaroo | $602,000 | 11.40% | 4.30% |
| Dallas | $570,000 | 6.50% | 4.50% |
| Westmeadows | $700,000 | 6.50% | 4.40% |
| Melton West | $571,000 | 8.80% | 4.20% |
| Lynbrook | $845,000 | 12.30% | 4.10% |
| Carrum Downs | $740,000 | 6.50% | 4.20% |
| Frankston North | $646,000 | 9.50% | 4.10% |
| Burnside | $800,000 | 12.50% | 3.90% |
Melbourne’s top suburbs for investors (units)
| Suburb | Median sale price | Annual median growth | Rental yield |
| Notting Hill | $384,000 | 10.90% | 6.90% |
| Sunshine | $516,000 | 12.20% | 6.00% |
| Broadmeadows | $465,000 | 11.80% | 5.70% |
| Cremorne | $600,000 | 5.30% | 6.00% |
| Fawkner | $590,000 | 9.90% | 5.00% |
| Maribyrnong | $480,000 | 5.50% | 6.10% |
| Meadow Heights | $498,000 | 10.60% | 5.30% |
| South Yarra | $570,000 | 5.30% | 6.10% |
| Bundoora | $460,000 | 5.70% | 5.70% |
| Coburg | $585,000 | 6.80% | 5.10% |
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