Melbourne is the capital of Victoria, Australia located in the south eastern tip of the continent on Port Phillip Bay. It is the second largest city in Australia with a population of around 4.1 million, about half a million less than Sydney.
Melbourne consists of inner city suburbs such as Carlton, St. Kilda, Richmond, Brunswick and Collingwood.
Moving further out into the suburbs we see Sunshine, Broadmeadows, Frankston, Dandenong, Werribee and Glen Waverley.
In the past 12 to 18 months, Melbourne has been one of the few capital cities of Australia to have a surging property market.
It has since cooled off much like the rest of Australia, making it a more volatile market to buy into.
According to Australian Property Monitors, as of March 2011, the median price for houses is $563,397 and for units it is $379,772. This is compared to a national median price of $455,000 for all dwellings.
The suburbs with the most recent fastest growth are:
- Cranbourne South $545,000 up 43%
- Williamstown North $775,000 up 36%
- Attwood $610,000 up 31%
- Sandhurst $540,000 up 26%
- Spotswood $640,000 up 22%
The auction clearance Rate as of July, 2011 is 53% declining from 61% in March.
As of May, 2011, Melbourne has the highest vacancy rate in Australia of 2.4% which is a significant increase on the previous year.
This could be attributed to the recent flurry of buying, more people have been getting into their own properties and therefore a decreased demand for rentals.
The gross yields in Melbourne are also quite low, around 4% for houses but with some of the more expensive areas only achieving 2 to 3%.
Even units in some areas are only getting around 3% yield, but if you look around 5% is achievable.
Since Melbourne has had a recent surge in prices, it may take some time now for rents to catch up and offer investors a good return.
Although Melbourne is a beautiful and wonderful city, it is not necessarily the best time to be buying investment property there. That is not to say you cannot find a good deal in Melbourne, but just know you are buying at the end of a small boom and, like most other capital cities in Australia, prices are currently coming back as demand slackens due to global uncertainty.