Where are investors putting their money in Melbourne?

What drives investment activity in one suburb over another?

Is it pursuit of a high yield or is it a desire for good capital gains?

These are often debated topics and interestingly the data suggests there is not one clear-cut answer.

For instance, a review of the proportion of houses owned by investors in the inner, middle and outer suburbs shows a high level of investment in suburbs with low and high yields.

In the inner city, those suburbs within a 10km radius of the CBD is where the highest level of investors can be found in Carlton North, followed by North Melbourne and Richmond.

Carlton North has a historically high level of appreciation and low yield whereas Richmond has a very low appreciation and higher yield.sell up

In the middle suburbs, those between 10 and 20k from the CBD, the investor activity is highest in growth suburbs with new housing – Laverton, Derrimut and Deer Park. These suburbs have good yield according to the research but lower capital gains prospects given the high level of supply.

Conversely, an established suburb such as Clayton has a high level of investors and very low yield, presumably because the market is purpose-built around students.

Finally, in the outer suburbs the investment activity is again concentrated in growth suburbs which are seeing a high rate of new home construction. For example Point Cook, Tarneit and Truganina.

The research suggests that there is more to the decisions of investors than suburb level analysis of yield and historical capital gains. Issues such as the level of supply is important, some suburbs are popular simply because they provide affordable stock for investors.

Others are popular because investors are capitalising on a local factor, such as a university.

Possibly what’s more important is that investment decisions are also made after consideration of the actual house and its relative location and price.



Subscribe & don’t miss a single episode of Michael Yardney’s podcast

Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.

Need help listening to Michael Yardney’s podcast from your phone or tablet?

We have created easy to follow instructions for you whether you're on iPhone / iPad or an Android device.


Prefer to subscribe via email?

Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.


Robert Larocca is RP Data's Victoria Housing Market Specialist. He has built a profile over the past eight years as an expert on the Victorian residential property market. Visit www.rpdata.com

'Where are investors putting their money in Melbourne?' have no comments

Be the first to comment this post!

Would you like to share your thoughts?

Your email address will not be published.


Copyright © Michael Yardney’s Property Investment Update Important Information
Content Marketing by GridConcepts