Authored by the expert who managed and guided the team behind the Australia Property Pack
Yes, the analysis of Melbourne's property market is included in our pack
Melbourne offers some of Australia's most promising investment opportunities, with suburbs delivering rental yields between 4.5% and 8.4% as of mid-2025.
Key investment areas include Werribee with median house prices at $613,750 and solid capital growth potential, Cranbourne offering both affordability and infrastructure development, and inner-city suburbs like Melbourne CBD delivering premium yields of 8.5%. Investors should budget for stamp duty costs of approximately 5.5% of purchase price plus additional upfront expenses of $3,000-$5,000.
If you want to go deeper, you can check our pack of documents related to the real estate market in Australia, based on reliable facts and data, not opinions or rumors.
Melbourne's investment landscape in 2025 shows strong fundamentals with city-wide vacancy rates at 1.8% and growing infrastructure projects driving long-term value.
The best performing suburbs combine affordability, transport connectivity, and population growth, with outer suburbs like Cranbourne and Werribee leading growth while inner areas provide steady yields.
| Investment Category | Best Suburbs | Key Metrics |
|---|---|---|
| High Yield | Melbourne CBD, Notting Hill, Heatherton | 8.5%, 8.4%, 8.2% rental yields |
| Growth Potential | Cranbourne, Werribee | 98%-99% 10-year growth |
| Affordable Entry | Werribee, Cranbourne | $480K-$614K median house price |
| Infrastructure Focus | Airport Rail corridor, SRL areas | Major transport upgrades |
| Balanced Investment | Outer eastern suburbs | 6-7% yields, steady growth |
What's your total budget, including stamp duty and other upfront costs?
Your total budget for Melbourne property investment extends far beyond the purchase price and requires careful calculation of all upfront expenses.
Stamp duty in Victoria represents the largest additional cost, calculated at approximately 5.5% of the property value for investors. For a $650,000 property, expect stamp duty of around $34,070. First home buyers receive concessions, but investors pay the full rate.
Additional upfront costs include legal fees ranging from $1,000 to $2,500, building and pest inspections costing $400 to $800, and loan application fees up to $1,000. If your deposit is less than 20%, Lenders Mortgage Insurance (LMI) adds thousands more to your budget.
Council rates adjustments, bank valuation fees, and settlement costs typically add another $1,500 to $2,000. For our $650,000 example, total upfront costs reach approximately $37,170 plus your deposit, meaning you need around $167,170 for a 20% deposit scenario.
Always add a 10% buffer to your calculated budget for unexpected expenses during the purchase process.
What kind of rental yield can you expect in different Melbourne suburbs right now?
Melbourne rental yields in 2025 vary significantly across suburbs, with the highest returns often found in specific pockets rather than broad areas.
The Melbourne CBD leads premium yields at 8.5%, driven by strong apartment rental demand and relatively lower purchase prices compared to houses. Notting Hill delivers 8.4% yields, while Heatherton achieves 8.2%, both benefiting from proximity to employment hubs and transport links.
Outer suburbs offer varying returns, with areas like Cranbourne and Werribee typically achieving 5.5% to 6.5% for houses and slightly higher for apartments. These areas balance affordability with growing rental demand from families and young professionals.
Inner eastern suburbs generally produce lower yields of 4.5% to 5.5% due to higher purchase prices, but offer stronger capital growth prospects. The trade-off between yield and growth potential requires careful consideration based on your investment strategy.
It's something we develop in our Australia property pack.
What's the median purchase price for units and houses in each target area?
| Suburb | Median House Price | Median Unit Price |
|---|---|---|
| Werribee | $613,750 | $430,000 |
| Cranbourne | $657,725 | $480,000 |
| Melbourne CBD | N/A (limited stock) | $550,000 |
| Notting Hill | $890,000 | $620,000 |
| Heatherton | $825,000 | $580,000 |
| Dandenong | $675,000 | $450,000 |
| Pakenham | $645,000 | $485,000 |
What's the historical capital growth rate for those areas over the past 5–10 years?
Melbourne's outer growth corridors have delivered exceptional capital growth over the past decade, significantly outperforming inner suburbs.
Cranbourne achieved 98% growth over 10 years, while Werribee recorded 99% growth, both driven by infrastructure development and population growth. These suburbs benefited from major transport upgrades and new shopping centers.
Inner suburbs like Notting Hill and Heatherton showed more modest but steady growth of 65% to 75% over the same period. While lower in percentage terms, the absolute dollar gains remained substantial due to higher starting prices.
The Melbourne CBD apartment market experienced volatility, with growth rates varying between 45% to 85% depending on the specific location and building quality. Premium developments near transport hubs performed better than generic apartment blocks.
As of June 2025, growth rates have moderated from peak levels, but outer suburbs continue showing stronger momentum than established inner areas.
What are the average vacancy rates in those areas?
Melbourne's vacancy rates in 2025 sit at 1.8% city-wide, indicating a relatively tight rental market favoring investors.
Outer growth suburbs like Cranbourne and Werribee typically maintain vacancy rates between 1.5% and 2.0%, reflecting steady rental demand from families seeking affordable housing. These areas benefit from continued population growth and limited rental stock.
Inner suburbs including Notting Hill and Heatherton show slightly lower vacancy rates of 1.2% to 1.6%, driven by proximity to employment centers and established infrastructure. Professional renters in these areas tend to stay longer, reducing turnover.
The Melbourne CBD experiences higher vacancy rates of 2.5% to 3.5% for apartments, influenced by international student numbers and short-term rental competition. However, quality properties in prime locations maintain lower vacancy rates.
Vacancy rates below 2% generally indicate strong rental markets where landlords can be selective with tenants and achieve asking rents without significant negotiation.
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How much weekly rent are similar properties in each suburb currently achieving?
Weekly rental returns in Melbourne vary significantly based on suburb location, property type, and local demand drivers.
Werribee houses achieve weekly rents of $480 to $520, while units rent for $380 to $420. Cranbourne shows similar patterns with houses renting for $490 to $530 weekly and units commanding $400 to $440.
Inner suburbs command higher absolute rents, with Notting Hill houses achieving $650 to $750 weekly and units renting for $450 to $520. Heatherton houses rent for $620 to $700 weekly, with units achieving $430 to $490.
Melbourne CBD apartments vary widely based on size and building quality, with one-bedroom units renting from $420 to $550 weekly and two-bedroom apartments commanding $550 to $750 weekly. Premium buildings with amenities achieve the higher end of these ranges.
Rental prices have increased by 8% to 12% across Melbourne over the past year, with outer suburbs experiencing stronger growth due to affordability pressures pushing renters away from inner areas.
What percentage of renters vs owner-occupiers live in each suburb?
The rental-to-ownership ratio significantly impacts investment performance and indicates suburb maturity and demographic composition.
Outer growth suburbs like Cranbourne and Werribee typically show 35% to 45% rental properties, reflecting their appeal to young families and first-home buyers who eventually transition to ownership. These areas attract both investors and owner-occupiers.
Inner suburbs such as Notting Hill and Heatherton maintain rental percentages of 25% to 35%, indicating more established communities with higher owner-occupier rates. This stability often translates to longer tenancies and steady rental demand.
The Melbourne CBD shows the highest rental percentage at 65% to 75%, dominated by apartments and attracting young professionals, students, and temporary residents. This creates consistent rental demand but potentially higher tenant turnover.
Areas with 30% to 50% rental properties often provide the best balance for investors, offering sufficient rental demand while maintaining community stability through owner-occupier presence.
It's something we develop in our Australia property pack.
How many days does it typically take to lease a property in each area?
Leasing timeframes in Melbourne reflect market tightness and rental demand strength across different suburbs.
High-demand areas like Notting Hill and Heatherton typically see properties leased within 10 to 18 days, driven by proximity to employment centers and established amenities. Quality properties in these suburbs often receive multiple applications.
Outer suburbs including Cranbourne and Werribee show leasing periods of 18 to 28 days, reflecting steady but less intense competition. Family-oriented properties in these areas may take slightly longer due to more considered decision-making by potential tenants.
Melbourne CBD apartments generally lease within 14 to 21 days, though this varies significantly based on building quality, price point, and seasonal factors. Premium buildings lease faster than dated complexes.
Properties priced competitively within their suburb's market range consistently lease faster than those with optimistic pricing. Well-presented properties with modern finishes reduce leasing timeframes by 30% to 40% compared to dated alternatives.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Australia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
What are the population growth trends and infrastructure developments in each suburb?
Population growth and infrastructure development drive long-term property performance and should heavily influence investment decisions.
Cranbourne and Pakenham benefit from massive infrastructure spending, including the Metro Tunnel project completion and upgraded rail services. These suburbs recorded population growth of 15% to 20% over the past five years, supported by new residential developments and employment opportunities.
Werribee gains from the Airport Rail Link project, scheduled for completion by 2029, which will dramatically improve connectivity to Melbourne's employment centers. The suburb's population grew 12% from 2020 to 2025, driven by affordability and infrastructure promises.
Inner suburbs like Notting Hill and Heatherton experience modest population growth of 3% to 5%, but benefit from established infrastructure and proximity to Monash University and medical precincts. These areas focus on infill development rather than greenfield expansion.
The Melbourne CBD continues evolving with major developments including Queen Victoria Market renewal and Docklands expansion. While population growth is modest at 2% to 4%, the area benefits from ongoing commercial and retail investment.
What are the local council rates, insurance, and ongoing costs per year in those areas?
Understanding ongoing costs is crucial for accurate investment return calculations and cash flow planning.
Council rates vary significantly across Melbourne, with outer suburbs like Cranbourne and Werribee charging $1,400 to $1,800 annually for houses and $1,200 to $1,500 for units. These councils often have lower rate bases due to newer infrastructure and lower service costs.
Inner suburbs including Notting Hill and Heatherton impose higher rates of $2,000 to $2,800 for houses and $1,600 to $2,200 for units, reflecting higher property values and established service levels.
Building insurance costs $800 to $1,500 annually depending on property value and location, while landlord insurance adds another $300 to $600. Strata fees for units range from $2,500 to $5,000 annually, with newer complexes often charging higher fees for facilities and maintenance.
Total annual ongoing costs typically range from $4,000 to $6,500 for houses and $5,500 to $8,500 for units, representing 3% to 5% of property value annually. Budget conservatively and include a maintenance reserve of $1,000 to $2,000 per year.
What type of dwelling—house, townhouse, apartment—performs best in each suburb?
Property type performance varies dramatically across Melbourne suburbs based on local demographics, land availability, and development patterns.
Outer suburbs like Cranbourne and Werribee favor houses for both yield and capital growth, as families dominate the rental and purchase markets. Houses in these areas typically outperform apartments by 1% to 2% in yields and 20% to 30% in capital growth over 10-year periods.
Inner suburbs such as Notting Hill and Heatherton show more balanced performance between houses and townhouses, with townhouses often providing optimal yield-to-growth ratios. Apartments in these areas underperform due to limited rental demand and abundant supply.
The Melbourne CBD strongly favors apartments, which dominate both rental and sales markets. One and two-bedroom apartments consistently outperform larger configurations, matching renter demographics and lifestyle preferences.
Townhouses emerge as the optimal compromise in middle-ring suburbs, offering house-like living with apartment-style maintenance, appealing to young families and professionals seeking lifestyle balance.
It's something we develop in our Australia property pack.
How do different suburbs score in terms of walkability, public transport, schools, and lifestyle amenities?
Lifestyle factors significantly impact both rental appeal and long-term capital growth potential across Melbourne suburbs.
Notting Hill and Heatherton excel in walkability and public transport access, with train stations providing direct city access within 45 minutes. These suburbs feature quality schools, parks, and shopping centers within walking distance, attracting professional families and supporting rental premiums.
Cranbourne and Werribee show improving transport connectivity but currently require car dependency for many activities. However, major infrastructure projects including new train stations and shopping centers are rapidly improving lifestyle scores and rental appeal.
Melbourne CBD scores highest for walkability and public transport, with most amenities accessible within walking distance. However, school options are limited, making these areas less suitable for families but ideal for young professionals and students.
Outer suburbs like Pakenham offer larger properties and newer amenities but score lower on walkability and transport access. These areas appeal to families prioritizing space over convenience, supporting different rental markets and investment strategies.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Melbourne property investment in 2025 offers diverse opportunities across different risk and return profiles, from high-yield CBD apartments to growth-focused outer suburbs.
Success requires matching your investment strategy to suburb characteristics, considering both immediate yields and long-term growth potential while factoring in all costs and infrastructure developments.
Sources
- Real Estate Australia - Most Affordable Suburbs 2025
- Savings.com.au - Top Rental Yield Suburbs
- OpenAgent - Highest Rental Yield Suburbs Australia
- SQM Research - National Vacancy Rates April 2025
- Domain - Rental Report March 2025
- Australian Bureau of Statistics - Regional Population
- CoreLogic - Monthly Housing Chart Pack June 2025
- PropertyMe - April Property Market Update 2025