Melbourne’s property market was hit hard by the city’s multiple and extended Covid-19 lockdowns throughout the height of the pandemic, but now buyers are back in force.
The city’s 260-day lockdown and high property prices saw Melbournians flee our southern state in huge numbers, losing 4,864 people in the March quarter of 2021 alone.
Prior to coronavirus Melbourne‘s population grew by around 120,000 people each year and now migrants are expected to come pouring back into Australia.
Because over the last few decades, Melbourne won the mantle of the world’s “most liveable city” more times than any other city in the world.
Melbourne has a unique lifestyle and economic benefits that will attract overseas migrants.
Sure many Australians see Melbourne as the poor cousin that caught coronavirus and was locked down for 260 days, but overseas people see Melbourne as the only World City of 5 million people that contained coronavirus.
Property prices surged in Melbourne in 2021 in line with the rest of the country, and while prices have now cooled from their peak in 2022, there are some suburbs where demand is still driving strong competition, according to recent PropTrack data.
Areas in lifestyle or coastal suburbs are in particularly strong demand as homebuyers wait to secure their dream property.
PropTrack economist Angus Moore said many of the most in-demand suburbs are in more peripheral areas, which is consistent with what's happening with home prices.
"We are seeing prices in peripheral parts of the city hold up a bit better than prices in the inner city, which suggests that the Covid trend towards people wanting a bit more space and being less tied to the inner city is continuing," he said.
"There's also an aspect of the relative affordability of some of these suburbs compared to the inner city."
The sea- and tree-change shift we have seen accelerate during the height of the pandemic has caused an uptick in homebuyers looking for more space, a larger home, lifestyle property, or waterfront living.
And the pandemic-driven shift to remote work has allowed more Australians to chase that dream move.
"They offer more of the sort of lifestyle trend that we've seen through Covid of larger homes and living near amenities like beaches and national parks as opposed to living close to the inner city," Moore said.
Analysis by PropTrack shows the Melbourne suburbs where buyer demand remains significantly strong.
Lifestyle suburbs, either in the middle or outer rings, feature strongly in Melbourne's most in-demand list as the sea- and tree-change shift sees buyers chase more space and larger homes.
Lower Plenty, 16km northeast of the CBD, topped the list with 118% more potential buyers looking at a house in that suburb than typical across Melbourne.
While Lower Plenty has the typical homes on quarter-acre blocks and a median house price of $1.417 million, its acreage properties have attracted huge interest and sales as high as $5 million to $6 million during the pandemic.
The median house price for the area is currently $1.41 million.
In second and third place were Warrandyte in Melbourne’s Outer East and North Warrandyte in Melbourne’s North East which have 116.5% and 111.8% more potential buyers respectively.
Median house prices for these areas are $1.49 million and $1.39 million respectively.
It wasn’t just lifestyle suburbs that made the list of in-demand suburbs though.
Some inner-ring suburbs also featured in the top 10, led by Caulfield (in fourth place) with 111% more potential buyers for houses than typical for Melbourne while Collingwood also made the most in-demand list.
For units, it was Melbourne’s inner suburbs that dominated the list, with the Mornington Peninsula also featuring twice.
The remainder is located in the Outer East, South East, and North East regions of the city.
In first and third place for units are Middle Park and Carlton North in Melbourne’s Inner region with 116.4% and 95.2% more potential buyers respectively than the typical Melbourne unit.
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The median price for units in Middle Park is $825,000 and $660,000 in Carlton North.
Frankston South on the Mornington Peninsula came in second place, with the data showing 101.9% more potential buyers for its $750,000 median priced units.
Here’s the full list:
According to PropTrack data, the bulk of the 10 most in-demand suburbs for both houses and units across the rest of Victoria is located in the Geelong suburbs.
For both houses and units, the Geelong region featured 8 times out of the top 10 lists, with the remaining suburbs in the Ballarat or Bendigo regions.
For houses, the top three spots have been taken by Geelong, Herne Hill, and East Geelong.
According to the data, these suburbs have 82.1%, 66.8%, and 63.6% more potential buyers for their houses respectively.
Median prices for the trio of suburbs in the Geelong region sit at $890,000, $765,000, and $945,000 respectively.
As mentioned, Geelong suburbs also take the top three spots for in-demand units.
Newtown, Herne Hill, and Hamlyn Heights each have 121.1%, 108.6%, and 93.9% more potential buyers than the typical Melbourne unit.
Median prices for units in these suburbs are an affordable $660,000, $389,999 and $550,000 respectively.
Here’s the full list:
While these in-demand areas across Melbourne and regional Victoria might make for a tempting investment, they aren’t necessarily the suburbs I would recommend investing in.
You see, you want to invest in stable suburbs and properties which offer long-term growth.
So while these suburbs listed might make for an attractive purchase, they aren’t necessarily where I’d recommend investing.
At Metropole, we always advise on the importance of investment-grade properties and locations, rather than chasing a hotspot or growth area.
But not just that.
Even before looking for the right location, you need to make sure you have a Strategic Property Plan to steer you through the challenges we’ll inevitably see ahead in our property markets.
Because aside from remembering that you should focus your efforts on investment-grade properties and locations, you also need to remember that property investing is a process, not an event.
That process has to be done in the right order – and selecting the location and the right property in that location comes right at the end of the process.
Long before we talk about a property or the right location with our clients at Metropole, we look at factors including their age, their timeframes, and the desired end results in other words, what do they really want the properties to do – are they looking for cash flow, capital growth, or a combination of both.
And that’s because what makes a great investment property for me, is not likely to be the same as what would suit your investment needs.
So at Metropole, it all starts with helping our clients formulate a Strategic Property Plan which takes into account their surplus cash flow position, their risk profile (for example would they consider undertaking renovations or small development), and whether they currently own a home or are wanting to buy a new home or upgrade their existing home in the future, if they are going to earn more income in the future, or if they’re going to decrease their family income because they’re having a baby, how many other investment properties they own, where they are located and how they are performing plus 35 other considerations.
So whether you’re looking to buy a new home or an investment property and you want more certainty and direction in these interesting times, my recommendation is to sit with an independent property strategist to formulate a plan.
It’s just too difficult to do on your own and I’ve found most investors tend to be too emotionally involved to see their situation objectively.
If you’re a beginner looking for a time-tested property investment strategy or an established investor who’s stuck or maybe you just want an objective second opinion about your situation, please leave us your details here and we’ll be in contact and give you more details about how to book a Strategic Property Plan Consultation.