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Finder’s Property Investment Index Melbourne

Find out which suburbs are forecasted for high price growth in Melbourne.

Australians love property, but for many, figuring out where to invest is the hardest part. Finder's Property Investment Index uses a range of data inputs to predict price growth in each suburb across Australia's major cities. Property Investment Index pages for Sydney, Brisbane, Adelaide, Perth and Hobart are also available.

As of March 2024, the following suburbs have the highest potential for price growth:
Houses

  • Brunswick East(88.3/100)
  • Lower Plenty(84.5/100)
  • South Kingsville(83.3/100)

Units

  • Hampton East(93.8/100)
  • Ashburton(91.9/100)
  • South Kingsville(91.5/100)

What is the Property Investment Index?

The Property Investment Index is a model that ranks suburbs based on their investment potential. Suburbs are scored out of 100, with 100 indicating very high predicted price growth and 0 indicating very low or negative predicted price growth.

The final score is calculated based on 3 factors:

  • Market demand (maximum 50 points): This is based on sales turnover, average days on market, vacancy rates, building approvals and distance to the CBD.
  • Population (maximum 40 points): This is based on population, population growth, income, income growth and unemployment rates.
  • Property (maximum 25 points): This is based on historical property price growth and current property prices.

An additional 15 points are given to suburbs that have had at least 1 property sale over the past 12 months. The number of points for each suburb is capped at 100.

The index is intended to be an indicator of relative price growth, rather than of property prices themselves. A high score does not necessarily mean that a suburb will have the highest house prices but that we can expect strong growth in that area.

Houses

Top scoring suburbs by price point

Units

Top scoring suburbs by price point

Search the Property Investment Index by suburb

How the Index works

Finder's Property Investment Index uses a range of data inputs to predict price growth in each suburb across Australia's major cities. These data inputs are weighted to produce a score out of 100, with 100 indicating very high predicted price growth and 0 indicating very low or negative predicted price growth.

In addition to the weighted inputs listed below, an additional 15 points are given to suburbs that have had at least 1 property sale over the past 12 months.

Investor activity in Victoria

Prior to the pandemic, investor activity in Victoria had been falling since 2017. When COVID-19 hit, this trend continued initially before a skyrocketing increase in investor home loans. Between October 2020 and December 2021, the value of new investor loans grew by 155% before reaching a peak of $3.2 billion in June 2022. As of August 2023, the total value of investor loans in Victoria has been reported at $2.1b, an increase of 2.9% month on month and a decrease of 16.5% year on year.

The data also shows investors are beginning to take on more of the market from owner-occupiers. In January 2021, investor loans made up 24% of all home loans, but that figure has now grown to 37%.

The RBA has hiked interest rates twelve times in a row. In May, following two years of inaction, the central bank initiated a series of rate hikes that has yet to conclude. This has so far added over $18,000+ to the annual cost of an average 30-year mortgage. The effects of these rate rises are already being felt in the market. This hits investors also. As borrowing gets more expensive, property prices are almost certainly going to fall further.

The rolling 3-month average sale price in Melbourne has fallen from $815,000 in December 2021 to $737,500 in July 2023.

Comparatively, however, some suburbs still have more comparative investment potential than others - which our index helps to highlight.

Property sentiment in Melbourne

About 53% of Melbourne residents expect property prices in their local area to increase in the next 12 months, according to Finder's Consumer Sentiment Tracker. This includes 17% who think price growth will be significant. On the other hand, 18% believe prices in their area will fall over the next year.



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