Melbourne’s Top Five Suburbs For Capital Growth
For property investors, the key to a successful investment is strong long-term growth. In most scenarios, property investors are seeking double digit capital growth on their initial investment. In some cases, though; depending on the value of the property, even 5% growth can be exceptionally lucrative. There are additional factors which can contribute to the success of an investment property. Liking the property yourself is one key factor which can significantly contribute to the likelihood of a strong return on investment.
Despite the fact that no investment can ever guarantee a profit, there are a few indications which give strong evidence towards buying property in a particular location. Historic long-term growth, plans to improve the local area with additional infrastructure and commercial enterprise, the number of residents with in-high-demand jobs, high rent and demand which exceeds supply are good indicators that an investment property in a certain area will be successful.
#5 – Glen Waverley
Glen Waverley has strong public transport links and entertainment facilities. It is also home to great schools. The suburb enjoys a low vacancy rate and a large population. However, year-on-year increase in median house price is relatively low and a large segment of the population is made up of young independents who are stereotypically unreliable as long-term tenants. The median three-bedroom house price is $1,452,000, year-on-year increases in median house prices are 6.23% and rental yield is 1.8% as of July, 2021.
#4 – Melton
Melton is crisscrossed by several major arterial roads and has a much lower entry price for three-and-four-bedroom houses. Its population growth is expected to rise and it has the fastest-growing economy in the state. However, like Glen Waverley, houses in Melton have a low year-on-year growth and low current demand. The median three-bedroom house price in Melton is $422,500, the year-on-year change in median house value is 6.79% and rental yield is 3.9%. As of August, 2021.
#3 Mount Martha
Mount Martha is an incredibly desirable suburb located close to wetlands, bushland and beaches. It has seen a high year-on-year increase in value historically. The local population earns enough to sustain rental and mortgage payments. Mount Martha also enjoys a higher-than-usual rental yield. On the flip side, Mount Martha is relatively far from the CBD, has a smaller-than-usual percentage of tenants renting and may be difficult to break into due to the extremely low vacancy rate. The median three-bedroom house price in Mount Martha is $1,350,000, the average year-on-year growth is 23.4% and rental yield is 2.5%, as of August, 2021.
#2 Brunswick East
In Brunswick East, a very high proportion of tenants are renters. It’s very close to the CBD and has seen very high capital gains over the last year. It also has a higher-than-average rental yield. Despite these pros, the suburb has relatively low year-on-year growth in median house price and primary tenants are young people who may be unreliable. The average three-bedroom house price in Brunswick East is $1,400,000, year-on-year increments in sales price are 16.1% on average and rental yield is 2.6%, as of August, 2021.
#1 McCrae
McCrae enjoys stable market entry potential with a lower-than-average sales price for a three-bedroom house. It enjoys massive year-on-year growth, relatively high rental yield and high demand. The community is very exclusive, however, and the small market might be hard to break into. Also, there is a relatively low proportion of tenants who rent in McCrae. The median price for a three-bedroom house in McCrae is $1,000,000, the year-on-year median growth is 30.53% and rental yields are 2.1%, as of August, 2021.
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