Buying a property in Melbourne: a complete guide

All sources have been thoroughly verified for credibility. Furthermore, a local real estate expert has reviewed and approved the final article.

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

Thinking of buying a property in Melbourne? You're not alone!

Many people are captivated by Melbourne's artsy culture and dream of owning a modern apartment or a chic townhouse in this city.

Is it a wise investment, though? Are property prices increasing in Melbourne? What is the current trend? Is it better to invest in the CBD or Southbank? What about the taxes? What rental yields should I expect?

We've figured it out for you.

The BambooRoutes team has done their homework on this market. Actually, we've put all our findings together in a pack. Get it now.

In this article, we'll provide you with helpful information.

How's the real estate market in Melbourne?

Is the property market going up or down? People have different ideas. Us? We rely on the latest data and stats for accurate answers.

Property types

In Melbourne, there are various types of properties for sale to suit different preferences and needs.

These include houses, which are standalone dwellings often with a yard; apartments or condos, which are units within multi-story buildings; townhouses, which are attached homes with multiple levels; and land, which offers the opportunity to build a custom home.

Additionally, there are commercial properties available, such as offices and retail spaces, for those interested in investment or business ventures.

Whether you're looking for a cozy home, a convenient city apartment, a low-maintenance townhouse, a plot of land for building, or a commercial space, Melbourne's real estate market has a diverse range of options to explore.

Buy or rent?

(If you want to live there yourself and not rent it to others)

If Melbourne has caught your heart as your city of choice, you might be considering whether it's better to buy a property or opt for renting in this lively Australian city.

Obviously, it's better to buy if you are looking to build long-term wealth and take advantage of potential capital growth in the Melbourne property market.

Actually, decisions become clearer with the property price-to-rent ratio in mind. This metric shows the relationship between rental income and the cost of buying the property.

According to Numbeo, the property price-to-rent ratio in Melbourne is around 22.79, which is around the world average.

To put it simply, it will take you an average of 23 years of rental payments to buy a property in Melbourne.

Property prices in Melbourne

On average, according to the last data from CoreLogic, buying a property in Melbourne would cost you around $7,900 per square meter.

Of course, there are noticeable differences. The value of a square meter for an apartment in Melbourne city center might differ from a suburban home in Richmond. We actually offer a more in-depth analysis in our pack for buying property in Melbourne and in Australia.

To put things in perspective, it is similar to the prices you can find in a city like Vienna.

Also, housing prices in Melbourne are 27% cheaper than in Sydney.

The most expensive neighbourhoods in Melbourne are probably Toorak, Brighton, and Armadale, while the cheapest areas are likely to be Broadmeadows, Langwarrin, and Dandenong.

Trends

First and foremost, we have to acknowledge that Australia is, today, one of the most stable countries in the world. The last Fragile State Index that has been reported for this place is 22.7.

It is something to have in mind when wondering whether it's a good investment to buy a property in Melbourne.

Also, according to the International Monetary Fund (IMF), Australia's economy is expected to soar by 8.8% in the coming 5 years, resulting in an average GDP growth rate of 1.8%.

If you want to invest in real estate in Melbourne it's a good thing because an expanding economy usually means people earn more, so they can buy property for themselves or as an investment, causing property demand (and then prices) to increase.

Also, in Australia, the average GDP per capita has changed by 4.0% over the last 5 years. The growth, although minimal, is still present.

This data point is signaling that property prices in Lucca might go up in 2024 and during the coming years.

Looking for more updated data? We've done a big-picture study to find out if it's a good idea to purchase property in Australia right now.

Buying property in Melbourne

Buying real estate in Melbourne can be difficult due to the lack of reliable and up-to-date information available on the market. That's why we have created the pack to buy property in Melbourne and in Australia.

Buying process

In our pack, we've explained the entire buying process in detail. We've provided clear information about prices and yields based on the area, guidance on negotiating the price, and options for securing a mortgage.

Now, we're offering you a simpler version, step-by-step, to make it easier for you to grasp.

This is the step-by-step process to purchase a property in Melbourne:

1. Determine budget and property requirements.
2. Obtain a Certificate of Title and Section 32 statement from the seller's agent.
3. Get pre-approved for a home loan from an Australian bank.
4. Engage a licensed real estate agent familiar with the Melbourne market.
5. Search for suitable properties in desired Melbourne suburbs.
6. Conduct property inspections to assess condition and location.
7. Research the property's history and compare market values using Melbourne property data.
8. Make a written offer through the agent, including any special conditions.
9. Negotiate with the seller on price and terms, using a Contract of Sale.
10. Arrange a building inspection and a Pest Inspection Report.
11. Once the offer is accepted, pay the deposit (usually 10% of the purchase price).
12. Settle the property transaction by exchanging documents and paying the remaining balance, typically within 30 to 90 days from the contract date. Transfer ownership through Land Victoria, and receive the keys to your new property in Melbourne.

Also, if you're not from the country, you might want to check our article on how to buy property as a foreigner in Australia.

Make a profitable investment in Melbourne

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Where to find a property

You may begin your property search in Melbourne with these helpful websites:

• Realestate.com.au - A comprehensive platform for real estate services, providing property listings, mortgage information, suburb research, and the latest property news.
• Domain - A property portal offering a wide range of real estate services, including property listings, home loans, new developments, and news updates.
• Flatmates - Australia's largest share accommodation website, connecting individuals looking for shared homes or flatmates.
• Allhomes - A real estate website providing various property services, including buying, renting, selling, and commercial properties.
• Realcommercial - The leading destination for commercial property, offering a wide range of listings, investment opportunities, news, and agency information.

Also, know that we have included contacts of real estate agencies, property lawyers, moving companies, expats communities and more in our pack for buying property in Australia.

Properties & Budget

As mentioned before, the average price per sqm in Melbourne is $7,900. A 1-bedroom property (60 sqm) would cost approximately $474,000, and a 2-bedroom (85 sqm) would cost approximately $672,000.

However, prices will change based on both the property itself and its location.

You can expect prices to be steeper in the upscale parts of Melbourne. A house in Toorak could have a price tag of about $1,490,000, while a condo in South Yarra would be around $840,000.

On the other hand, certain areas are friendlier to your budget. You might encounter a property in Werribee for $370,000 or a property in Craigieburn for just $300,000.

Find a more detailed price list in our full pack for buying property in Australia.

Risks and pitfalls

Here are the main pitfalls specific to buying a property in Melbourne, Australia:

• Overlooking council regulations: Ignoring local zoning laws and restrictions can lead to costly renovations or legal issues.
• Underestimating bushfire risks: Failing to assess the property's proximity to bushfire-prone areas may pose safety and insurance challenges.
• Neglecting flood zones: Overlooking flood-prone areas can expose you to potential property damage and insurance complications.
• Not considering heritage overlays: Purchasing a property with heritage overlays may limit modifications and affect resale value.
• Disregarding wildlife impact: Ignoring the presence of protected species may hinder property development plans.
• Overlooking termite threats: Neglecting to inspect for termite damage can lead to costly pest control and repairs.
• Ignoring strata rules: Purchasing a strata property without understanding complex bylaws may lead to conflicts with neighbors and management.
• Not factoring in foreign investment rules: Foreign buyers must comply with specific regulations, and failure to do so can result in penalties and legal issues.

We don't want this to happen to you, so we have included a full checklist for your property investment in our pack of documents. Avoid these mistakes and save a lot of money.

Everything you need to know is included in our Australia Property Pack

Living in Melbourne

Living in Melbourne is a great experience, with its vibrant culture, excellent dining and entertainment options, and stunning natural environment, making it an ideal place to buy property.

Cost of living

The cost of living in Melbourne is generally considered to be higher than in other parts of Australia, but it is still considered to be relatively affordable compared to other major cities around the world. The cost of housing, groceries, and transportation are all higher than the national average, but there are discounts and deals available for those who know where to look.

Here are some examples to better understand the cost of living in Melbourne, Australia:

• Rent for a one-bedroom apartment in the hipster neighborhood of Fitzroy: $2,500 per month.
• A meal at a local restaurant with "Vegemite," a popular Australian spread: $25.
• Monthly "myki" card for public transportation: $140.
• Utilities (electricity, water, heating) for a small apartment in Southbank: $110 per month.
• A cup of "Flat White," a classic Australian coffee: $4.50.
• Ticket to the "National Gallery of Victoria," a renowned art museum: $20.
• Monthly membership at a popular fitness chain like "Anytime Fitness": $90.
• A bottle of "Coopers Pale Ale," a famous Australian beer: $5.

Neighbourhoods and spots

Since we strive to present information clearly and in a reader-friendly manner, we've created a summary table outlining the different neighborhoods in Melbourne. For yields, prices and rents, check our property pack.

Life in Melbourne

The economic landscape in Melbourne is largely defined by its diverse range of industries, from finance and professional services to manufacturing and retail. It is also home to a large number of international businesses and a highly educated population, which has helped to create a strong and diverse economy.

What expats usually like the most in Melbourne is the city's diverse culture and vibrant nightlife, with plenty of bars, cafes and restaurants to explore. They also appreciate the city's stunning natural scenery, from the beaches and parks to the Yarra Valley and the Great Ocean Road.

Unfortunately, we can't say there is no crime in Melbourne (the crime rate index is around 44, which is not so favorable. Examples of crimes in Melbourne include theft, burglary, assault, drug offences, and fraud, which are mainly committed by the local population and not typically experienced by expats.

A good point for a property investor - Melbourne has an extensive network of light rail, bus, and train services known as the Melbourne Metro Rail System.

Access to healthcare in Melbourne is excellent, with a Healthcare Index of 72. A strong healthcare infrastructure always improves the desirability of a location, which is a good thing for real estate.

Finally, it is worth noting that Melbourne has two universities ranked in the top 100 worldwide: University of Melbourne and Monash University.

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Renting out in Melbourne

This section is for you if you want to buy property solely for renting out and earning income.

Long-term

Tenant Profiles in Melbourne

According to the data reported by Wikipedia, the home ownership rate in Australia is 66%, which is average.

It means that, if you decide to buy and rent out in Melbourne, there will be a good number of people who can become your potential tenants.

If you decide to buy and rent out to long-term tenants, you should target young professionals, families, students, and retirees in the Melbourne area. These tenants are looking for a variety of housing options, from studio apartments to single-family homes.

Here is a little summary table we've made for you.

Rental yields

Nowadays, rental yields in Melbourne are usually below 5%. It's not much. A good rental yield is usually around 7% or higher. Maybe, you knew it already.

The best rental yields in Melbourne tend to come from properties located in areas with strong transport links and amenities, as these areas are more attractive to tenants. Additionally, properties in areas with high demand and low supply tend to offer higher yields due to competition among renters.

For further explanation and a more detailed breakdown, you can check the reports and analyses we have made.

Short-term

You could also decide to rent short-term to international students studying at Melbourne universities, or to business travelers visiting the city on short-term assignments.

If you decide to go with that option, look for properties in the inner city suburbs of Melbourne, such as Southbank, Carlton, Fitzroy, and South Yarra. These areas offer great amenities and are popular with tourists and short-term tenants.

You will have some competition though - there are around 18,000 Airbnb listings in Melbourne. The average daily rate stands around $189, which is quite high.

You have the opportunity to generate a nice additional income stream then. According to online testimonials and analytics platform like AirDNA, Guesty and Inside Airbnb, people who offer short-term rentals in Melbourne can make around $2500 per month. Also, the average occupancy rate is estimated at 67%.

Is it worth buying real estate in Melbourne then?

Buying a property in Melbourne can be a fantastic investment if you're in it for the long haul. Melbourne's property market has shown historical growth, and with an average price-to-rent ratio of around 23 years, it makes sense to buy if you plan to stay for a while.

The city's property prices, while still relatively high, are notably more affordable than those in Sydney, making it an attractive option. Additionally, Melbourne's stable economy, expected growth, and access to amenities and transportation contribute to its appeal for property investors. However, it's crucial to be aware of potential pitfalls, such as overlooking regulations or low rental yields, and to conduct thorough research before taking the plunge.

On the flip side, if you're looking for a short-term stay, have a limited budget, or prioritize flexibility, buying property in Melbourne may not be your best bet. Property transactions come with associated costs, and if you're not committed to a long-term stay, renting might be more cost-effective.

Furthermore, some areas with high property demand can be quite pricey, and you might find it challenging to afford a property in your desired neighborhood. Finally, rental yields in Melbourne are typically below 5%, which may not provide the substantial income stream you desire as an investor.

In summary, Melbourne offers great opportunities for property investment, but it's essential to align your decision with your long-term goals, financial situation, and lifestyle preferences to determine whether it's truly worth buying property in this vibrant Australian city.

Make sure you understand the real estate market in Melbourne

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The content provided here is for informational purposes only and does not imply endorsement or advice. While we strive for accuracy, we do not guarantee the completeness or reliability of the information, including text, images, links, or other elements in this material. Following the content and analyses presented here does not assure specific outcomes. For guidance tailored to your individual circumstances, it is recommended to consult with a professional, such as a lawyer, accountant, or business advisor.

Buying real estate in Australia can be risky

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