Finder’s Property Investment Index Melbourne

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

Updated Apr 29, 2022. What changed?

Fact checked

We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!

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. A Property Investment Index for Sydney is also available.

As of June 2022, the following suburbs have the highest potential for price growth:

Houses

Alphington (92/100)
Aberfeldie (91/100)
Carnegie (91/100)

Units

Aberfeldie (91/100)
Yarraville (91/100)
McKinnon (91/100)

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 is climbing 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 June 2021, the value of new investor loans grew by 129% before reaching a peak of $3.1 billion in December 2021.

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 outlook for the property market is definitely negative in the near-term," says Richard Whitten, Finder home loans expert.

"Interest rates are already rising and the Reserve Bank has all but said future rate rises are coming soon. This will make it harder for buyers to borrow money and will limit price growth," he adds.

"So far though, investor activity remains strong. A record number of Victorian investors took out loans in March, and the combined value of their financial commitments is just off the state's December peak," Whitten says.

"But with interest rates soaring and prices beginning to fall in Melbourne, it seems likely that investor activity will start to slow down."

Property sentiment in Melbourne

Over half of Melbourne residents (56%) expect property prices in their local area to increase in the next 12 months, according to Finder's Consumer Sentiment Tracker. This includes 19% who think price growth will be significant. On the other hand, 20% believe prices in their area will fall over the next year.

Finder's Property Investment Index uses a range of data inputs to predict price growth in each suburb across Australia's major cities. Each suburb is given a score out of 100, with 100 indicating very high predicted price growth and 0 indicating very low or negative predicted price growth.
Our model used 12 data inputs, including property price growth, unemployment rates and income growth (see table above for details). Each of the inputs is scored to distribute the data between 0 and 100. For instance, a suburb with an unemployment rate of 0% would receive a score of 100 for the unemployment metric. These 12 sub-scores are then weighted to calculate an overall score between 0 and 100. An additional 15 points are awarded to suburbs that have had at least 1 property sale over the past 12 months.
Houses and units are analysed separately so that each suburb is assigned 1 index score for houses and 1 for units. There is less property data available on units, particularly in suburbs where houses make up the majority of sales. This is why some suburbs are missing data on units.
In cases where a data point (e.g. price growth) is not available for either units or houses within a suburb, the available data is used for both property types. For example, if sales turnover for units is unavailable in a suburb, the sales turnover figure for houses is assumed. If the data point is missing from both units and houses, the suburb is given a score representing the 17th percentile of all properties (i.e. one-third of the average).
Note that the suburb-specific CoreLogic data we use lags by 3 months. This means that data released in May reflects the property market in February.

- The index uses historical data to predict future changes. We assume past population, income and property price growth are indicative of future growth.
- We analyse data by suburb, but in some instances, data is not available at the suburb level. In this case, we use the equivalent data at the postcode level instead.
- Data used on building approvals is at the LGA level rather than the suburb level.

Thank you for your feedback!

Sophie Wallis

Sophie Wallis is an insights analyst with a passion for data storytelling. She spends her time turning complex data into digestible stories and uncovering new consumer trends. When she isn't working, you'll find her planning her next overseas holiday or bingeing on a big novel. Sophie has a Bachelor of Economics from the University of Melbourne.

How much does virtual real estate cost in the metaverse? Finder’s Property Investment Index Sydney

More guides on Finder

The Future of Telecommunications report 2022
Finder’s Future of Telecommunications report explores the major trends shaping the future of mobile and broadband markets.
Energy statistics Australia 2022
Find out how much the average household spends on energy, how Australia's energy prices compare globally, and statistics on energy stress.
Finder’s Property Investment Index Hobart
Finder's Property Investment Index predicts price growth in each suburb across Australia's major cities. Find out how your suburb stacks up.
Finder’s Property Investment Index Adelaide
Finder's Property Investment Index predicts price growth in each suburb across Australia's major cities. Find out how your suburb stacks up.
Finder’s Property Investment Index Perth
Finder's Property Investment Index predicts price growth in each suburb across Australia's major cities.
Finder’s Property Investment Index Brisbane
Finder's Property Investment Index predicts price growth in each suburb across Australia's major cities.
What is the cost of a commute?
The average Australian spends $112 on commuting costs every week. How much could you be saving by switching to public transport?
Finder Green Consumer Report 2022
Cost of living report 2022
We crunched the numbers on the rising cost of living. How are Australian households faring among rising inflation and interest rates?
The Future of Credit Cards report 2022
Finder’s Future of Credit Cards report explores the trends shaping credit cards and digital payments, including the rise of BNPL.

Ask an Expert

Click here to cancel reply.

Display Name

Your Email (will not be published)

Your Question

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.

Finder’s Property Investment Index Melbourne

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

In this guide

Investment finance guides

Strategy + advice

Home Loans From

What is the Property Investment Index?

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

Investor activity is climbing in Victoria

Property sentiment in Melbourne

Methodology

Assumptions

Disclaimer

Sophie Wallis

More guides on Finder

Ask an Expert

Important information about this website