Which Victoria suburbs are next to boom?

Which Victoria suburbs are next to boom?

Well, according to REA Insights, Dromana on the Mornington Peninsula has been identified as the Melbourne suburb to watch, with its beachside lifestyle, relative affordability and proximity to the city proving a winning formula with families.

Its top features include pristine beaches and close proximity to Melbourne.

According to PropTrack Senior Economist, Angus Moore, the Mornington Peninsula has always been a popular area of Greater Melbourne, with price growth particularly strong across the last few years.

He further commented:

"Compared to pre-pandemic, prices are up a bit over 30% across the broader Mornington Peninsula region.

And that's despite the fact that they've come back a bit over 8% as interest rates have risen, so they did perform very strongly through the pandemic.

That's consistent with what we're seeing in some other parts of Australia too, which is a buyer interest in coastal areas that are perhaps aren't regional, but are not necessarily close to the city."

Data from REA show that properties in this area have been in high demand with investors, holidaymakers and retirees lately.

Meanwhile, aside from Domorama, other upcoming suburbs to watch are Reservoir, located 11km from the CBD, and inner suburb Elwood.

REA noted that Elwood’s short distance of 8km to the Melbourne CBD, good mix of well-regarded schools, and family-friendly feel were among the locale’s strong appeal.

On the other hand, with a house price median of less than a million dollars, Reservoir was a family-friendly suburb, populated by many younger families.

A note for investors...

This information makes for an interesting read, but there are many "investment grade suburbs" in Melbourne.

These locations typically have higher disposable incomes and people are likely to be prepared to pay a premium to live in a property in one of these locations and are able to withstand fluctuations in the property market and increases in interest rate rises.

In general these are gentrifying suburbs, where people with higher incomes are moving in.

Of course not all properties in these suburbs are "investment grade."

We would only buy a property:

• That would appeal to owner-occupiers.
  Not that we plan to sell the property, but because owner-occupiers will buy similar properties pushing up local real estate values.
  This will be particularly important in the future as the percentage of investors in the market is likely to diminish
• Below intrinsic value – that’s why we avoid new and off-the-plan properties which come at a premium price.
• With a high land-to-asset ratio – this doesn’t necessarily mean a large block of land, but one where the land component makes up a significant part of the asset value.

• In an area that has a long history of strong capital growth and that will continue to outperform the averages because of the demographics in the area including gentrifying areas.
• With a twist – something unique, or special, different or scarce about the property, and finally;
• Where they can manufacture capital growth through refurbishment, renovations or redevelopment rather than waiting for the market to do the heavy lifting as we’re heading into a period of lower capital growth.

But what makes a great investment property for me, is not likely to be the same as what would suit your investment needs.

But even before looking for the right location, make sure you have a Strategic Property Plan to steer you through the upcoming challenging times our property markets will encounter.

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 means that things have 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.

About Brett Warren Brett Warren is National Director of Metropole Properties and uses his two decades of property investment experience to advise clients how to grow, protect and pass on their wealth through strategic property advice.