Melbourne continues to be one of Australia’s best performers with regard to property investment, even outdoing traditional rival Sydney. Investors are attracted to a number facets of Melbourne, including its growing population (projected to overtake Sydney by 2030), the number of workers based in the inner city (an increase of 24 percent in the last decade) and Melbourne’s consistently high performance in liveability indexes. Melbourne has a diverse range of suburbs in which to invest. The inner eastern and south eastern suburbs continue to hold value and there are a number of fast growing outer-suburban areas as well. Melbourne property prices also make it the perfect place to consider investment
Key to investment is finding the best suburb; key to finding the best suburb are these simple tips.
1. Auction clearance rate
This is the percentage of properties that go to auction and actually sell. If demand in the area is high, but thereare not enough properties on the market, it is likely there will be multiple bidders at each auction and the properties will sell. Suburbs with high clearance rate make good investment areas.
2. Time on the market
This is generally measured in days (DOM – days on market) and is the time it takes for the property to sell. The count begins when the property is listed and ends at the sale date. If there is a high demand in the area, the DOM rate drops because buyers do not want to miss out and purchase quickly and may make offers prior to auction. Suburbs with low DOM can be good for investing as it indicates the popularity of the area.
3. Property vacancy rate
This gives an indication of the rental properties that are currently vacant. A high vacancy rate can indicate renters are not looking to move into the area, while very low rates make the area potentially good for investment as it is unlikely any property will be vacant for a long period.
4. Rental yield
This is linked to low vacancy rates and can be a reflection of an extended period in which finding a rental property in the area is difficult. This creates demand from tenants and in the past has lead to situations where rents are determined by a bidding war (this is to be outlawed by legislation in 2018). High demand for an area will push up rents in tight rental markets and increase rental yield.
5. Rental proportion
This is the number of renters in a suburb as a proportion of the total amount of residents in the suburb. This proportion gives a good indication of the potential competition for any rental investment property. Especially when considered with the property vacancy rate and rental yield, this can suggest whether an area is likely to be a good investment. A high proportion of renters will likely mean a larger number of landlords to compete with in the rental market.
6. Online search interest (OSI)
This is the number of people searching online for property compared to the number of properties available for sale. So if there are 20 properties for sale in a suburb and 200 people searching for property in that suburb the OSI is scored at 10. Like many of the statistics we have looked at, this can be a strong indication of demand exceeding supply; the larger the OSI the less property available and the more likely prices in the area will rise.
Of course, if the thought of tracking through data to find these figures is not appealing, there are other options. Accrue Real Estate is a well-established, premium property introductory service with staff experienced in tracking the Melbourne property market. So if big data is not you, let Accrue Real Estate lay out the facts and figures on the best real estate investments.
Chance originally uploaded by Mark Strozier, used under CC.