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Finder’s Property Investment Index Melbourne

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

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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.



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