Melbourne: The Best Place to Buy Property in Australia?

Is Melbourne perhaps the best place in Australia to invest in property at the moment?  If you’re a seasoned real estate investor it apparently is, and if you’re planning on staying in the housing market for a long period of time it certainly is – well, that’s the current general consensus of opinion among property experts in Australia anyway.

Melbourne – the best place to buy property in Australia – discuss!  That’s exactly what we’re going to be doing in this article.  We will present all the arguments currently shouting in favour of Melbourne’s real estate market and let you judge for yourself from the weight of opinion stacked in the city’s favour!

Supply versus demand is just about the most fundamental fact that investors have to get their heads around before jumping into, out of or away from a market.  And in the case of Melbourne it is certainly the case that demand is far outstripping supply and that as a result rental rates are about to run away with themselves. 

Across the whole of Australia there is a general trend of demand outstripping current supply according to the latest ANZ Housing Snapshot – while 140,000 new residential units are coming to the market each year, underlying demand is currently running at 170,000 - and so as you can see Melbourne is being affected by this general national trend.

The population expansion in the greater Melbourne city area is at a 40 year high and this is stretching supply to breaking point hence the aforementioned reference to rental rates in the city which are soaring. 

So far Melbourne’s entire housing market is set to witness rental rate increases of 6% year on year by year end – but if you take just the apartment market as a sub-segment of the overall residential sector, this saw rental rate increases of over 4.5% in the second quarter of this year alone according to Residex.

Naturally this suggests strongly that an investor looking for income returns should be targeting the apartment marketplace. The Real Estate Institute of Victoria’s findings on vacancy levels also backs this assumption up – according to their statistics the vacancy rates on apartments in the city are at record levels for the past 25 years standing at around 1.2% - now that is tight!

Despite all of these positive factors that weigh very heavily in favour of Melbourne’s property market, median real estate prices in the greater city area are actually far lower than in the likes of Canberra, Perth and Sydney making property in Australia in Melbourne undervalued according to Metropole Property Investment Strategists. 

So from an investor’s perspective you have the right dynamic in terms of supply versus demand, you have exceptionally tight rental vacancy rates allowing for strong rental rate increases and yet you can buy in at a far lower price than in equally well respected and in demand market places.  You know, it could just be that Melbourne is the best place to buy real estate in Australia right now…