Make Your Move: Melbourne’s top investor suburbs revealed

Despite looming price falls, Melbourne’s southeast has some of the city’s best options for investors with money to splash on houses. And another surprise suburb out west made the list.

Gowanbrae came in at number ten on the top 20 list of Melbourne investor suburbs. Alissa and Daniel Carrabba with son Zakariah outside their new house. Picture: Jason Edwards

Melbourne’s southeast and Mornington Peninsula are the city’s best options for investors with money to splash on houses, despite looming price falls.

And the Melton market is packed with potential for those on a budget, as entry-level prices hit record heights and interest rates climb steadily, new research shows.

The Herald Sun’s Make Your Move report, powered by PropTrack, has ranked Bonbeach Melbourne’s best bet for investors in houses, and Capel Sound the most solid for units.

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They lead the charge of top 20 lists for both property types across the city, after PropTrack weighed up rental demand against yield and capital growth to produce its priority picks.

PropTrack economist Angus Moore said even after mammoth growth since the onset of the pandemic, the Mornington Peninsula and “lifestyle” areas remained best positioned.

“That shift, at least part of it, seems to be permanent,” he said.

“People do want more space, and it’s easier to do that further from the city — and it’s far more possible today for people to work from home than it was two-and-a-half years ago.”

Eight of the top 20 Melbourne suburbs for investors in both houses and units were on the Mornington Peninsula, with suburbs in the outer southeast and east also dominating.

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Bonbeach is the best suburb for house investments, with 14 Glenbrook Ave up for sale with a $1.6m-$1.7m

Gowanbrae also ranked highly for houses, such as 11 Lilac Mews which has a $935,000-$990,000.

But unit markets in two of Melbourne’s most affordable suburbs, the outer northwest’s Melton and Harkness, also featured, and could prove wise buys for different reasons.

“Because price is relatively more affordable, there’s a better gross rental yield than other parts of Melbourne,” Mr Moore said.

“Which for a particular type of investor, could be very attractive.”

Advantage Property Consulting director Frank Valentic noted there were no inner Melbourne suburbs in the top 20 for houses or units, with the exception of Cremorne.

“The tables have turned — the inner suburbs used to be gold for investors, but now the outer suburbs have taken over,” he said.

“The affordability is a major thing … clients are going further out to get more bang for their buck.”

Mr Valentic added that because properties in these areas were more affordable, buyers could get a better return.

“The vacancy rate is below a balanced market and there’s more renters than properties,” he said.

Tighter budgets amid rising interest rates are also heaping more demand on the most affordable end of the market, as some who otherwise would have bought in a pricier bracket vie against entry-level buyers.

Units in Capel Sound proved to be a great investment, such as 53/15-33 Truemans Road, which has a $420,000-$450,000 price guide.

Units in Moorabbin also fared well. 502/17 Taylor St is for sale for $665,000.

ANZ now believes the Reserve Bank of Australia will take the cash rate beyond 3 per cent by late 2022, more than 12 months earlier than its previous forecast.

The cash rate sits at 1.35 per cent after back-to-back 0.5 per cent rises, with similar increases needed each month for the remainder of the year to reach ANZ’s confronting forecast.

But Aus Property Professionals director Lloyd Edge said there were still opportunities to get ahead in the difficult climate, and aspiring investors should look for properties below market value and motivated sellers, and be ready and willing to negotiate terms.

“If you can be flexible on the settlement terms of your contract, this can put you a head above other potential buyers, as flexibility is a strong negotiations tool to bring to the table,” he said.

“If you are able to settle in as little as 21 days instead of the standard 35 or 42 days or offer an unconditional offer with no cooling off period at all, you could find yourself getting a much better deal on a property, and it will make your offer look far more attractive, even if you’re not necessarily the highest bidder.”

39 Balmoral Ave, Safety Beach is for sale $1.195m-$1.27m price guide.

Being known to local agents and having pre-approval sorted were other key tips.

Airport West Real Estate agent Dejan Hovancek said investors were flocking to Gowanbrae, No. 10 for houses, “from Point Cook to Mickleham”.

He said this was likely due to the demand ramped up from less available properties.

“There has only been 20 house rentals within the last 12 months, but we experienced a high demand of people wanting to rent in Gowanbrae,” Mr Hovancek said.

“With its average five-year and quarterly capital gains, we should see a healthy growth in the long term and years ahead.”

Nelson Alexander Fitzroy agent Andrew Melilli said investors were starting to return to the market in the inner north because “rent is so expensive”.

“For single fronts where they might need a little bit of work, they’re liveable and fine, but not fully done, people are paying so much in rent, you might get a single-front a little cheaper than two-three months ago, but a much better rental return on the property,” he said.

Ray White Werribee’s Jeff Gaul said interstate investors had been circling the outer west for about five years, drawn to its affordability relative to proximity from the CBD.

GOWANBRAE GROWTH

Alissa and Daniel Carrabba with son Zakariah, 18 months, outside their now Gowanbrae house. Picture: Jason Edwards

Alisse Carrabba, 32, and husband Daniel, 31, have just purchased a four-bedroom house in Gowanbrae, where they plan to grow their family and reside for some time.

The couple are moving from their first home in Mickleham with their 18-month-old son, Zakariah, and expect to see steady growth in their new home’s value.

Their new neighbourhood is one of PropTrack’s top Melbourne picks for investment in houses.

The interior of the Carrabba’s new Gowanbrae pad.

“It’s a beautiful, established area, close to the CBD and shops,” Ms Carrabba said.

“And it’s become quite a family pocket … there are lots of younger families buying there now.”

Their Duranta Drive pad has already indicated its growth potential, selling to the Carrabbas for more than $100,000 above its $685,000 sale just one year earlier, according to CoreLogic.

“The growth is constant when you compare what the houses were selling for six years ago,” Ms Carrabba said.

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