If you're looking at Melbourne for growth suburbs you're looking in the right direction. As you'd expect with the current regional property market boom in Australia, the common pattern is that growth suburbs in Melbourne are primarily situated outside the main CBD area. Some suburbs have defied the odds though.
In this article, we break down what we think are 7 of the best suburbs to invest in Melbourne for 2021, based on data, research, and opinions from experts, Melbourne property managers, and analysts.
These suburbs are in no particular order, and we fully recognise that there are other great suburbs to invest in we may have missed.
⭐ The Melbourne suburb to invest in if: you’re looking for very high compound growth rates.
McCrae shows a 24.3% annual change in house prices according to a Domain Property Report. Not a bad start is it?
You'll find the suburb on Mornington Peninsula, which is, in general, a popular region with massive property price growth rates. Vacancy rates are as low as 0.18% in the suburb, with about 10.71% of the population being renters.
McCrae boasts a modest rental yield but the growth rate for houses is really why this suburb has such appeal. It's a strong choice as long as you believe in the regional trend. To capitalise on this trend consider local property management in McCrae, and start building a robust portfolio.
- Median house price McCrae: $1,000,000 for houses, $582,500 for units
- Average rental yield McCrae: 2.3% for houses and 4.0% for units
- 5 year compound growth rate for McCrae: 10.8% for houses and 3.5% for units
⭐ The Melbourne suburb to invest in if: you want a low-risk, low-capital, great all-rounder investment property, and bidding rounds don't scare you.
Sunbury basically ticks all the boxes that you want in a rental property right now.
- It's in a regional area, but the CBD is still easily accessible.
- The properties are very affordable at $575k for houses on average.
- The rental population is healthy at 19.09% with vacancy rates as low as 0.87%.
- Strong growth rates at 8.9% for houses.
The only real issue is that this suburb has become a bit over-hyped in the Melbourne property market. You'll likely struggle to get your hands on a property here, and might be faced with tough bids. If you do manage to get in with the right bid and decide to treat that home as an investment, consider expert property management outfits in Sunbury, to better manage your investment property.
- Median house price Sunbury: $575,000 for houses, $432,500 for units
- Average rental yield Sunbury: 3.4% for houses and 4.3% for units
- 5 year compound growth rate for Sunbury: 8.9% for houses and 5.9% for units
⭐ The Melbourne suburb to invest in if: you’re looking for low capital-investment properties.
Despite being an inner-city suburb, Melton made it into RealEstate.com.au’s best suburbs to invest in Melbourne in 2021 because it shows an 8.9% growth in house prices. Even for those eager to buy units, this suburb shows potential with a 7.1% growth rate.
However, as Michael Yardney shares on Property Update, it’s safer to put your wallet away when you see units, especially in the inner city.
Despite how well most of the Melbourne suburbs property growth looks like, the inner city is still lagging behind, thanks to the lingering effects of the pandemic.
Still, prices are quite low here, so it's a great option if you're on limited capital, and with the right property management firm in Melton you can see your home's value skyrocket!
- Median house price Melton: $391,250 for houses, $326,000 for units
- Average rental yield Melton: 4.3% for houses and 4.8% for units
- 5 year compound growth rate for Melton: 8.9% for houses and 7.1% for units
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4. Mount Martha
⭐ The Melbourne suburb to invest in if: you want to invest in luxury vacation-type rentals, and you want safe, high-income tenants.
Mount Martha is known for being a family-friendly area. It has a laid-back atmosphere with plenty of shops and cafes for leisure shopping, and beaches and wetlands to keep kids and adults alike happy.
Mount Martha is the clear winner when it comes to beautiful homes set in exclusive sections of the suburbs, overlooking the ocean. Modernity and luxury blend beautifully in their architecture.
Hopefully, it justifies the high prices!
That being said, rental yields are low in the suburb. It's a good option if you've been looking to diversify your portfolio with more high-value investments.
- Median house price Mount Martha: $1,125,000 for houses, $656,250 for units
- Average rental yield Mount Martha: 2.7% for houses and 3.8% for units
- 5 year compound growth rate for Mount Martha: 8.4% for houses and 5.2% for units
The Kingston region is expected to see a boost in its popularity in 2021, according to an interview with Nathan Jones for Savings.com. Among the suburbs that made into Melbourne’s property market forecasts, Seaford shows the highest compound growth rate for houses.
The highlights of these suburbs are the availability of budget-friendly houses which also promise easy access to amazing beaches, schools and are only 15 km away from Melbourne’s CBD.
It's another low-risk, safe all-rounder suburb tipped for growth in the Melbourne property market. Maybe something to look towards with the help of property management experts in Seaford, if you're struggling to get your hands on a property in Sunbury.
- Median house price Seaford: $700,000 for houses, $527,112 for units
- Average rental yield Seaford: 3.1% for houses and 3.6% for units
- 5 year compound growth rate for Seaford: 8.2% for houses and 5.7% for units
6. Brunswick East
This is another growth suburb in Melbourne city that defied gloomy forecasts for the Melbourne property market.
Featured in Domain Property Report’s list of suburbs with the highest rise in property prices, it sits at a 7.9% compound growth rate for houses, but -0.8% for units.
The median price of houses have climbed by 23.3% on a year-on-year basis as well, which is impressive considering how pricy they already are.
Like its diverse community, the properties available here are just as varied, from apartments and family homes to renovated cottages.
If you can afford it, houses are a great option here, but we would stay away from units, and ideally, you should consider property management specialists in Brunswick East if you ever get around to finding your dream home in the neighbourhood.
- Median house price Brunswick East: $1,286,500 for houses, $508,200 for units
- Average rental yield Brunswick East: 2.5% for houses and 4.2% for units
- 5 year compound growth rate for Brunswick East: 7.9% for houses and -0.8% for units
⭐ The Melbourne suburb to invest in if: you're interested in positively gearing your property and you want a steady cash flow year in, year out.
With ample options to enjoy the outdoors from gardens, golf courses and parks, Craigieburn also offers award-winning housing constructions.
And what’s even better about this suburb is its family-oriented lifestyle, recreational activities, and spacious surroundings. All while having easy access to the city centre.
Growth rates are modest but the rental yield is strong at 3.7% for houses and 4.8% for units and a 1.51% vacancy rate overall. Since properties here are cheap it's likely an easy and safe option for a positively geared property, and with the right property management expert in Craigieburn, you're sure to reap steady returns.
- Median house price Craigieburn: $564,000 for houses, $374,000 for units
- Average rental yield Craigieburn: 3.7% for houses and 4.9% for units
- 5 year compound growth rate for Craigieburn: 7.8% for houses and 2% for units
Final thoughts on which suburbs to invest in Melbourne for 2021
Going forward, avoid dumping your money in any CBD real estate.
Domain Property Reports are telling us the last quarter of 2020 has been very favourable for the Melbourne property market. House prices have lifted by 5.3% while unit prices have grown by 4.4% in spite of current circumstances, numbers that also translate to other states, which indicates that the real estate and property management outfits in QLD and NSW are booming.
These numbers have actually out-performed pre-2020 figures, which shows how strong and resilient the Melbourne property market is!
But, this isn't true for all suburbs.
The important thing you need to know going forward is that the growth is primarily happening in regional areas while CBD remains mostly stagnant. This will likely continue to be the case for a while.
Until then, enjoy the regional gains!
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