Is buying a property in East Melbourne a good investment?

Last updated on December 20, 2023

Yes, the analysis of Melbourne's property market is included in our pack

If you've marveled at the historic architecture and cultural heritage of East Melbourne, you may have envisioned establishing a residence in this charming part of Melbourne, immersing yourself in its local history and timeless allure.

Is it a good idea though? What's the current state of the real estate market in that area? Are property values appreciating or depreciating? Are investors seeing returns on their real estate investments? How's the demand for rentals?

We'll answer all these questions for you! When building and updating our property pack for Australia, our team has been researching and surveying this area. In fact, there is significant customer interest in investing there. Therefore, we believe it would be beneficial to include some information about it in our property pack.

Why do property buyers like investing in East Melbourne?

East Melbourne, a suburb of Melbourne, has carved out a unique position in the property market, making it highly attractive to a variety of buyers.

Let's dive into what sets East Melbourne apart from other areas and explore its rise in popularity, the demographic it attracts, and even consider some of its potential downsides.

First off, East Melbourne's appeal largely stems from its blend of tranquility and accessibility. Unlike the bustling city center, East Melbourne offers a serene, leafy environment, making it a peaceful retreat in the heart of a major city.

The area boasts beautiful parks, like the Fitzroy Gardens and Treasury Gardens, which add to its charm and provide residents with ample green space, something not commonly found in city living.

In terms of accessibility, East Melbourne is just a stone's throw away from the central business district. This proximity to the city center means residents can enjoy all the conveniences and amenities of urban living without the typical hustle and bustle. It's this balance of peaceful living and urban convenience that really sets East Melbourne apart from other suburbs.

It's been a gradual process. Over the past few decades, the suburb has steadily gained recognition for its unique offerings. The real estate market here has seen a consistent rise in demand, particularly among those who value both the tranquility of suburban life and the proximity to the city.

As for the future, it seems likely that East Melbourne will maintain its appeal. The suburb's unique blend of qualities isn't something that can be easily replicated elsewhere.

While market trends can be unpredictable, the enduring demand for properties in East Melbourne is backed by its distinctive character and location advantages.

It's a diverse mix. You'll find young professionals who appreciate the easy commute to the city, families who value the open spaces and quiet streets, and even retirees looking for a peaceful yet accessible place to live. This diversity adds to the vibrant community feel of the area.

However, it's also important to consider the potential downsides. East Melbourne, with its high demand and unique offerings, tends to be on the pricier side. This can be a barrier for some buyers.

Additionally, while the area is quieter than the city center, it may not offer the same level of nightlife or entertainment options, which might be a drawback for those who prefer a more lively urban scene.

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Why is East Melbourne a nice place to live?

East Melbourne offers a distinct living experience, characterized by a unique blend of lifestyle, culture, and amenities.

The lifestyle and culture in East Melbourne are notably refined and relaxed. This area is known for its elegant Victorian-era architecture, lush parks like Fitzroy Gardens, and a generally serene atmosphere.

It's a place where history and modernity coexist harmoniously. The cultural vibe here is sophisticated yet unpretentious, attracting those who appreciate a quieter, more cultured urban experience.

The expat community in East Melbourne is quite vibrant. Thanks to the area's proximity to the central business district and its overall appeal, it attracts a diverse international crowd. Expats here often find it easy to mingle with locals and other foreigners, creating a welcoming and inclusive environment.

Living in East Melbourne does come with a higher price tag. The cost of living here is generally higher than in other Melbourne suburbs, reflecting the area's desirability and the quality of life it offers.

Property prices and rents are above average, but many find the expense justified by the lifestyle and amenities the area provides.

Safety is a key aspect of East Melbourne. It is considered one of the safer areas in Melbourne, with low crime rates and a strong community presence. This sense of safety adds to its appeal, especially for families and those who prioritize a secure living environment.

When it comes to amenities and facilities, East Melbourne is well-equipped. For education, there are reputable institutions like East Melbourne Primary School and secondary schools in nearby areas.

Healthcare needs are well catered to, with top facilities like the Royal Victorian Eye and Ear Hospital and St Vincent’s Hospital. Shopping and dining options are plentiful, with local boutiques and cafes offering a high-quality experience.

Infrastructure quality in East Melbourne is excellent. The roads are well-maintained, and utilities like water and electricity are reliable. Internet connectivity is generally strong, aligning with Melbourne's overall high standards for digital infrastructure.

Accessibility is another strong point for East Melbourne. It's well connected to the rest of Melbourne, making commuting and travel easy. Major transport hubs like Melbourne Airport are reachable with a reasonable commute, especially considering the suburb's proximity to major roads and highways.

Public transportation options are robust. East Melbourne is served by multiple tram lines, making it convenient to reach the CBD and other parts of the city.

The area also benefits from efficient bus services and is close to major train stations like Flinders Street and Parliament, enhancing its connectivity.

How much does it cost to buy real estate in East Melbourne?

If you need a detailed and updated analysis of the prices, rents and yields, you can get our full guide about real estate investment in Australia.

Understanding the cost of buying property in East Melbourne requires a closer look at the types of properties available, market trends, and future projections.

East Melbourne, as a prestigious suburb of Melbourne, offers a diverse range of residential properties, each catering to different preferences and budgets.

The residential property landscape in East Melbourne is quite varied. You'll find everything from modern apartments and townhouses to heritage houses and, occasionally, luxury villas.

The high demand in this area is often for properties that offer a blend of historic charm and modern convenience. This demand is driven by buyers who appreciate the area's history and its proximity to the city center, along with the tranquility it offers.

In terms of new developments versus resale properties, East Melbourne is predominantly characterized by resale properties. This is due to the suburb's established nature and the limited availability of new land for development.

However, there are occasional new developments, often in the form of boutique apartment complexes, which blend in with the suburb's historic character.

The price range for properties in East Melbourne can vary widely. For apartments, you might find prices ranging from AUD 10,000 to 15,000 per square meter. Houses, particularly those with historic value or larger land size, can fetch significantly higher prices, sometimes exceeding AUD 20,000 per square meter.

These figures are indicative and can fluctuate based on the property's size, condition, and exact location within East Melbourne.

Over recent years, property values in East Melbourne have shown a steady increase. This trend is reflective of the suburb's desirability and the overall growth in Melbourne's property market. The scarcity of available properties in East Melbourne, combined with high demand, has contributed to this upward trend in prices.

Looking ahead, there are no major developments or city planning changes currently announced that are likely to drastically affect property values in East Melbourne.

Predicting the future of the real estate market in East Melbourne involves considering several factors. Given the suburb's established nature, ongoing demand, and limited supply of new properties, it's reasonable to expect that property values will continue to rise, albeit at a potentially moderate pace.

Specific factors indicating a potential increase in value include the suburb's consistent popularity, its proximity to Melbourne's central business district, and the limited availability of new properties.

Additionally, East Melbourne's appeal to a diverse range of buyers, from professionals to families and retirees, underpins its real estate market's resilience.

Where is the best area to buy a property in East Melbourne?

Identifying the best area to buy property in East Melbourne depends on various factors including atmosphere, property types, and price ranges.

East Melbourne, being a diverse and highly regarded suburb of Melbourne, offers different experiences across its areas.

Firstly, let's consider the atmosphere. The area near the Fitzroy Gardens is renowned for its serene and green environment. This part of East Melbourne is like an urban oasis, offering tranquility and beauty right next to the city's hustle and bustle.

The proximity to the gardens not only provides a picturesque setting but also contributes to a more relaxed lifestyle.

Regarding property types, East Melbourne is a blend of historic and contemporary. Near the central areas, you'll find grand Victorian homes that speak of the suburb's rich history. These properties often come with significant price tags due to their size, architecture, and historical value.

On the other hand, closer to the edges of the suburb, there are more modern apartments and townhouses. These properties tend to be more affordable and are popular among professionals and small families who seek a balance between city life and a peaceful home environment.

Price-wise, the areas closer to the Melbourne Cricket Ground (MCG) and Wellington Parade tend to be pricier. This is due to their prime location, offering easy access to sporting events, public transport, and the city center.

On the other end, areas farther from these landmarks might offer more affordable options while still providing the benefits of living in East Melbourne.

In terms of up-and-coming areas within East Melbourne, it's a bit of a tricky subject. Being an established suburb, most of East Melbourne has been highly sought after for years.

However, areas undergoing redevelopment or those closer to the fringes of the suburb might offer more growth potential. These areas can be particularly attractive to buyers looking for a longer-term investment or those hoping to capitalize on future developments.

When considering where to buy a property, areas around Victoria Parade and Hotham Street are worth exploring. These areas offer a good mix of residential options, from elegant historic homes to stylish modern apartments, catering to a range of preferences and budgets.

On the contrary, areas immediately adjacent to major roads or commercial zones might be less advisable for those seeking a quieter residential experience. While still offering the convenience of proximity to the city, these areas can come with the drawbacks of increased noise and traffic.

Here is a summary table to help you visualize better. If you need more detailed data and information, please check our property pack for Australia.

Area	Atmosphere	Property Types	Price Range
Near Fitzroy Gardens	Serene, green, urban oasis	Victorian homes, apartments	High
Central East Melbourne	Historic and prestigious	Grand Victorian homes	Very high
Edges of East Melbourne	Contemporary, accessible	Modern apartments, townhouses	Moderate to high
Near MCG and Wellington Parade	Prime location, vibrant	Diverse, including luxury options	Very high
Victoria Parade and Hotham Street	Mixed residential, convenient	Historic homes, modern apartments	Varied
Adjacent to major roads/commercial zones	Noisier, busy	Varied, more affordable options	Moderate

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Is there a strong rental demand in East Melbourne?

East Melbourne, known for its blend of urban convenience and serene living, certainly has a strong rental demand, characterized by specific trends in terms of duration, tenant profiles, property types, and potential returns.

In terms of rental duration, East Melbourne experiences a healthy demand for both short-term and long-term rentals, but the nature of the area tends to favor long-term arrangements.

This trend is influenced by the suburb's appeal to professionals, families, and expatriates who often seek stability and a long-term base in a prestigious area close to Melbourne's CBD.

The target demographic in East Melbourne is quite diverse, yet specific in nature. You'll find young professionals and corporate executives attracted to the area due to its proximity to the city center. These individuals often look for modern apartments or smaller homes that are low-maintenance and conveniently located.

Additionally, there's a significant demand from families and expatriates, who are typically drawn to the larger, more spacious homes or townhouses in the suburb, particularly those that offer proximity to parks, schools, and other family-friendly amenities.

When considering the profiles of potential tenants, it’s clear that East Melbourne attracts a relatively affluent demographic. These tenants value the area's tranquil atmosphere, architectural charm, and accessibility to the city.

They are often looking for properties that are well-maintained, with modern amenities and a touch of luxury. Apartments with secure parking, good internet connectivity, and access to public transport are highly sought after by young professionals.

Meanwhile, families and expats might prioritize properties with additional living space, outdoor areas, and proximity to schools and parks.

Specific areas within East Melbourne that are particularly popular for rentals include those near Fitzroy Gardens and Wellington Parade. These locations offer a blend of natural beauty and urban accessibility, making them highly desirable for renters.

Certain amenities can significantly reduce vacancy rates in rental properties. Features like secure parking, modern kitchens and bathrooms, air conditioning, and access to public transport and local amenities (like shops and cafes) are particularly attractive.

These features not only meet the practical needs of tenants but also enhance the overall appeal of the property, aligning with the expectations of the East Melbourne rental market.

Regarding potential returns on investment, properties in East Melbourne can yield attractive returns, although specific numbers can vary. Given the suburb's prestige and high demand, landlords can expect healthy rental yields.

For well-located and well-maintained properties, particularly modern apartments or renovated homes, landlords might see yields in the range of 3-5%.

However, these figures are estimations and can fluctuate based on market conditions, property type, and location within the suburb.

In terms of property types with increasing demand and potential for better yields, modern, well-appointed apartments, especially those catering to the lifestyle of young professionals, are seeing growing interest. These properties, due to their lower maintenance and appeal to a significant segment of the rental market, could potentially offer better returns compared to larger, more traditional homes.

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Is it easy to buy a property as foreigner in East Melbourne?

Before we answer the question, please know that we have an article dedicated to the experience of buying real estate as a foreigner in Australia.

Buying property as a foreigner in East Melbourne, Australia, comes with specific regulations and considerations.

Firstly, foreign buyers in Australia are subject to certain regulations. The Foreign Investment Review Board (FIRB) oversees these regulations.

As a foreigner, you're typically required to obtain FIRB approval before purchasing property in Australia. This process involves an application that assesses the type of property you intend to buy.

Generally, foreign investors are allowed to purchase new properties or vacant land for development but buying existing residential properties is usually restricted.

The purchasing process in East Melbourne follows standard Australian real estate practices. It starts with property identification, followed by due diligence, making an offer, obtaining FIRB approval if necessary, and finally, completing the purchase through a legal process called conveyancing.

This process involves transferring the property's legal title from the seller to the buyer and requires a solicitor or conveyancer.

There are several risks associated with property investment in East Melbourne, as with any real estate investment. Market fluctuations can impact property values, and changes in local market conditions or broader economic factors can affect the return on investment.

Additionally, being an upmarket area, East Melbourne properties come with high entry costs and ongoing expenses like maintenance, taxes, and possibly higher property management fees.

A common pitfall for foreigners buying property in Australia is underestimating the importance of local market knowledge. This includes understanding the nuances of the local real estate market, tax implications, and legal requirements.

For instance, Australia has specific stamp duty laws and capital gains tax, which can significantly affect the overall cost and return of your investment.

Working with a local real estate agent or lawyer is extremely important, especially for foreign buyers.

A local expert can provide valuable insights into the East Melbourne market, assist with navigating legal requirements, and help avoid common mistakes. They can also facilitate the FIRB approval process and ensure compliance with all regulations.

Common exit strategies for property investors in East Melbourne include selling the property for capital gain or holding onto it for rental income. The choice of strategy depends on various factors like market conditions, personal financial goals, and changes in life circumstances.