Melbourne real estate: Where you should buy to make money now and become a millionaire in 10 years
The Victorian property markets where buyers can instantly start making money — and potentially make $1 million in a decade — have been revealed.
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The Victorian property markets where buyers can instantly start making money — and potentially make $1 million in a decade — have been revealed.
Units in Frankston, Carrum Downs and Pakenham would allow investors to double their return over the next 10 years if they followed the same growth trajectory as the past 10, according to exclusive PropTrack data that shows where Millennials can make savvy moves.
Frankston’s current median unit price of $535,000 would reach $1.06m by 2033, while units in Carrum Downs could jump from $565,000 to $1.054m, if recent growth continues.
PropTrack economist Angus Moore said suburbs on the Mornington Peninsula were heavily favoured after huge price increases over the past few years.
“During the pandemic, places like Mornington Peninsula and Geelong that were a little bit out of Melbourne but offered a bit more space and were still a reasonable commute to the CBD were quite popular,” Mr Moore said.
“But it really comes down to understanding what the conditions are of the suburbs you’re investing in and what the prospects, rents and rental vacancies are … weekly rent isn’t the only thing that matters because if it sits vacant for six weeks that’s not good. You need to understand the risk of rental vacancies.”
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But he noted vacancy rates were currently extremely tight, making it a good time to invest.
As for houses, Rosebud and Geelong West were the top suburbs where first-home buyers could break in to the market for less than $1m and make more than $1m in a decade’s time.
Rosebud’s current median house price of $889,000 could reach an eye-watering $2.136m in ten years, while Geelong West’s typical house price of $960,000 could hit $2.276m.
Buyer’s advocate and co-host of the My Millennial Property podcast, Emily Wallace rents in Melbourne but has three investment properties — one in Melbourne and two in Queensland.
“The way to make money if you were a rentvestor is to buy in areas where you’re expecting a strong (rental) yield and strong capital growth,” she said.
“I rent where I live largely due to the fact it offers me flexibility in changing circumstances and I have selected the properties I’ve invested in for long term growth... they’re set and forget properties.
“I don’t want to be tied to a property while I’m figuring my life out, like a lot of Millennials, and where I’m at it would cost me more in body corp fees and mortgage repayments.”
SLIM PICKINGS FOR MELBOURNE MILLENNIALS
In Melbourne, there are just two suburbs where the median monthly rent would cover mortgage repayments on a typical unit — and none for houses.
An investment unit in Melbourne’s CBD would put an extra $140 per month towards the mortgage, while Carlton could earn an extra $40 a month.
Ms Wallace said when choosing an investment property it was important to consider lifestyle factors of prospective tenants, which for a lot of Millennials meant back yard space for a dog, rather than children.
“It’s important to have some sort of land component, a lot of tenants are young professionals with a dog so it (land) demands more rent than an apartment or terrace house,” she said.
Ms Wallace said other gentrifying areas such as Glenroy, Oak Park and the unit market in Mordialloc were likely to boom in the next 10 years.
Units in Pakenham would also double in price by 2033 if growth continued on the same trajectory, with the current unit median of $475,000 reaching $842,000.
Ray White Pakenham director Alistair Boyle said he had noticed a trend of buyers selling their properties closer to the city and moving to Pakenham for its larger, modern houses and affordable prices.
“I think the growth corridor will continue because we have new estates opening up and there’s a lot more expansion coming with the railway line, and more schools and infrastructure,” Mr Boyle said.
“There’s a lot of young first-home buyers and families here.”
Masters Broker Group director Mario Borg said it was important for young first-home buyers to consider their borrowing capacity and maximum purchase price before diving head first into an investment.
“Once you know your maximum purchase price, then you can figure out what type of property to get into,” Mr Borg said.
“The type of fundamentals that make a good investment property are things like proximity to lifestyle amenities like cafes, transportation, shopping centres and school zones, or if you’re buying further out having access to freeways and roadways.”
He added if Millennials had the finance and borrowing capacity to break into the property market, it was almost always a solid investment.
“One thing you’ll never get back is time,” Mr Borg said.
“If you asked someone if they would have bought a property in Melbourne 10 years ago or even 40 years ago, they’ll usually say they wish they had.”
Top 10 suburbs by biggest 10-year increase if prices grow at the same pace as last decade
*Median in 10 years is calculated assuming the previous 10 year growth rate
House
Rank, Suburb, Current median, 10 year % change, Median in 10 years
1, Blairgowrie, $1,720,000, 197%, $5,101,000
2, Rye, $1,200,000, 182%, $3,388,000
3, Mount Martha, $1,638,000, 169%, $4,398,000
4, Gisborne, $1,156,000, 157%, $2,970,000
5, Ocean Grove, $1,175,000, 152%, $2,956,000
6, Mount Eliza, $1,750,000, 151%, $4,394,000
7, Torquay, $1,372,500, 143%, $3,334,000
8, Dromana, $1,100,000, 142%, $2,659,000
9, Rosebud, $889,000, 140%, $2,136,000
10, Geelong West, $960,000, 137%, $2,276,000
Unit
Rank, Suburb, Current median, 10 year % change, Median in 10 years
1, Frankston, $535,000, 98%, $1,060,000
2, Mornington, $780,000, 96%, $1,531,000
3, Mount Waverley, $1,060,000, 93%, $2,043,000
4, Croydon, $680,000, 92%, $1,303,000
5, Balwyn, $1,050,000, 91%, $2,005,000
6, Seaford, $637,250, 90%, $1,212,000
7, Carrum Downs, $565,000, 86%, $1,054,000
8, Bayswater, $658,400, 83%, $1,204,000
9, Boronia, $660,000, 81%, $1,193,000
10, Pakenham, $475,000, 77%, $842,000
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emily.holgate@news.com.au
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