Is buying a property in St. Kilda a good investment?

Last updated on November 10, 2024

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

If you've embraced the coastal charm and vibrant entertainment options of St. Kilda, you might have considered securing a property in this lively Melbourne district, enjoying its beachside lifestyle and cultural richness.

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 St. Kilda?

St. Kilda, nestled in Melbourne, holds a unique allure for property buyers, differentiating itself from other real estate markets in several key ways.

Let's dive into what makes this area stand out, its popularity timeline, the demographics it attracts, and also touch on some potential drawbacks.

Firstly, St. Kilda's appeal largely stems from its vibrant lifestyle and picturesque location. Imagine a blend of beachside charm and urban chic – that's St. Kilda for you. This suburb boasts beautiful beaches, which is a rarity so close to a major city center like Melbourne.

The allure of sun, sand, and surf, coupled with a bustling nightlife and a plethora of cafes, restaurants, and bars, makes it a highly desirable spot. This combination is somewhat unique in Melbourne, where other suburbs may offer either an urban feel or a beachside retreat, but rarely both in such harmony.

Now, let's talk about when St. Kilda began to capture the imagination of property buyers. Its transformation into a sought-after locale wasn't overnight. Historically, St. Kilda had periods of both high and low appeal.

However, it was during the late 20th century that it really began to emerge as a trendy hotspot. This resurgence was fueled by significant urban renewal projects and the gentrification of the area. Today, it retains a reputation as a hip and happening place, suggesting that its popularity isn't just a passing trend.

This ongoing appeal is supported by consistent demand in the real estate market, showing that buyers continue to be attracted to its unique mix of offerings.

It's a melting pot, really. You'll find young professionals drawn to the vibrant lifestyle, artists and creatives inspired by its eclectic charm, and even families who appreciate the blend of beachside living with urban convenience.

This diverse demographic mix adds to the area's vibrant atmosphere, making it stand out from more homogenous suburbs.

However, it's important to consider some of the weaknesses of St. Kilda. No place is perfect, after all. Due to its popularity, property prices can be quite high, which might put it out of reach for some buyers.

Additionally, the bustling nightlife and tourist draw can mean that certain parts of St. Kilda get quite busy, and noise can be an issue. For those seeking a quieter, more suburban lifestyle, this could be a drawback.

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Why is St. Kilda a nice place to live?

Living in St. Kilda offers a unique experience that combines the allure of beachside charm with urban convenience.

Let's explore what makes St. Kilda such a nice place to live, looking at various aspects like lifestyle, culture, cost of living, safety, amenities, infrastructure, and accessibility.

St. Kilda is renowned for its vibrant lifestyle and rich culture. Imagine a place where every day feels a bit like a holiday - that's St. Kilda for you. The suburb is dotted with cafes, restaurants, and bars, each offering a taste of local and international flavors.

The lifestyle here is laid-back yet energetic, with the beach and the iconic Luna Park adding a leisurely yet fun dimension to everyday life. Cultural events, music festivals, and local markets are regular features, making it a hub for those who enjoy a lively social scene.

The expat community in St. Kilda is quite robust, thanks to its welcoming atmosphere and diverse cultural offerings. People from all over the world are drawn to this suburb, contributing to its multicultural vibe.

This diversity is reflected in the variety of international cuisines, festivals, and community groups found in the area.

However, living in St. Kilda does come with a price tag. The cost of living here can be higher than in some other Melbourne suburbs, primarily due to its popularity and seaside location.

Housing costs, in particular, tend to be on the higher side, reflecting the demand for properties in this desirable area.

The amenities in St. Kilda are a major draw. For families, there are educational institutions like St. Kilda Primary School and Elwood College nearby.

Healthcare needs are well catered to with facilities like The Alfred Hospital, one of Melbourne's major hospitals, located just a short drive away. Shopping enthusiasts will enjoy the Acland Street precinct, known for its boutique shops and bakeries.

Infrastructure in St. Kilda is well-developed. The roads are well maintained, and utilities like electricity and water supply are reliable. Internet connectivity is generally good, catering to the needs of both residents and businesses.

Accessibility is one of St. Kilda's strong suits. It's well-connected to other parts of Melbourne, making commuting relatively easy.

Whether you're heading to the Melbourne CBD or other suburbs, the connectivity is seamless. For those traveling further, the Melbourne Airport is accessible via major highways or public transport.

Speaking of public transportation, St. Kilda is well-served by trams and buses, making it easy to get around without a car. The tram routes, particularly the ones along St. Kilda Road provides convenient access to the city and neighboring areas.

This network of public transport is not only efficient but also an integral part of the Melbourne experience.

How much does it cost to buy real estate in St. Kilda?

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.

Buying a property in St. Kilda can be quite an adventure, given the variety and vibrancy of the real estate market there.

Let’s delve into what types of properties are available, the demand, pricing, market trends, and what the future might hold for potential buyers in this area.

St. Kilda boasts a diverse range of residential properties. You’ll find everything from modern apartments and Victorian-style houses to luxury villas. Apartments, especially those with views of the beach or in close proximity to the bustling Acland Street, are particularly in high demand.

These are favored by young professionals and investors due to their affordability and the lifestyle they offer. Houses, often reflecting the suburb's rich architectural heritage, appeal to families and those seeking a bit more space and character.

The real estate market in St. Kilda is a mix of both new developments and resale properties. New developments, particularly high-rise apartments, have been cropping up, catering to the demand for modern living spaces.

However, the charm of St. Kilda's older, more established properties remains a significant draw, especially for those seeking a connection to the suburb's historical and cultural roots.

Pricing in St. Kilda varies widely based on property type, location, and amenities. For a general idea, prices per square meter can range significantly.

Apartments might be on the more affordable end of the spectrum, while houses, particularly those with historical value or larger land sizes, command higher prices. The luxury segment, including high-end apartments or villas, can reach even higher price points.

Over recent years, property values in St. Kilda have shown an upward trend. This increase can be attributed to the suburb’s popularity, its lifestyle offerings, and its continuous development. It’s a place that consistently attracts interest from both local and international buyers, keeping the market buoyant.

Looking ahead, there are several factors that could influence the real estate market in St. Kilda. Any upcoming developments or city planning changes, like improvements in public transportation or infrastructure upgrades, could impact property values.

For instance, enhancements in public amenities or the addition of green spaces could make the suburb even more attractive, potentially driving up property prices.

Predicting the future of the real estate market always comes with a degree of uncertainty, but St. Kilda seems well-positioned for continued interest and value appreciation.

Factors like its proximity to Melbourne's CBD, the continued appeal of beachside living, and the suburb's vibrant culture are likely to keep attracting buyers.

Additionally, if the trend towards urban living continues, with a preference for locations that offer both lifestyle and convenience, St. Kilda’s properties could see further increases in value.

Where is the best area to buy a property in St. Kilda?

When considering the best area to buy a property in St. Kilda it's important to understand the diverse character of its different neighborhoods.

St. Kilda is not a one-size-fits-all location; its areas vary significantly in terms of atmosphere, property types, and prices.

One of the most sought-after parts of St. Kilda is the area near the beach, particularly around The Esplanade and Acland Street. This area is characterized by its bustling atmosphere, with a blend of cafes, restaurants, and shops.

Properties here tend to be a mix of modern apartments and classic Victorian homes. The proximity to the beach and the vibrant street life makes it a prime location, but this also means that property prices in this area are generally higher.

For those looking for something quieter yet still within St. Kilda, the streets further inland offer a more subdued atmosphere. These areas tend to feature more residential streets and are populated with a mix of apartments and older-style houses.

While still close to the amenities and charm of central St. Kilda, these locations are typically more affordable.

An up-and-coming area within St. Kilda is around Carlisle Street. This area has been gaining popularity due to its trendy cafes and shops, along with easy access to public transport.

The properties here are a mix of older apartments and renovated homes, offering a balance of character and modern convenience. The area is increasingly appealing to young professionals and small families.

In terms of specific areas where it would be a good idea to look for a property, areas around St. Kilda Marina and Elwood bordering St. Kilda can offer a good mix of lifestyle and value. These areas are slightly away from the hustle and bustle but still close enough to enjoy all that St. Kilda has to offer.

Conversely, areas immediately adjacent to the busiest parts of Acland Street and Fitzroy Street might not be advisable for everyone. These areas can get quite noisy, especially during weekends and evenings.

If you prefer a quieter living environment, these bustling spots might not be the best choice, parking can be a challenge in these areas due to the high influx of visitors.

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	Description	Property Types	Price Range	Notes
Near The Esplanade & Acland Street	Bustling, close to beach and vibrant street life	Modern apartments, Victorian homes	Higher	Prime location, high demand
Inland Streets	Quieter, more residential	Apartments, older-style houses	Moderate	More affordable, family-friendly
Carlisle Street Area	Trendy, up-and-coming	Older apartments, renovated homes	Varies	Popular with young professionals
Near St. Kilda Marina & Elwood Border	Balanced lifestyle, less busy	Varied	Good value	Quieter yet accessible
Adjacent to Acland & Fitzroy Street	Very busy, especially on weekends	Varied	Varies	Potentially noisy, parking challenges

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Is there a strong rental demand in St. Kilda?

In St. Kilda there's a notable demand for rental properties, shaped by various factors including location, property type, and demographic preferences.

Firstly, St. Kilda caters to both short-term and long-term rental markets, but the dynamics are slightly different for each.

Short-term rentals are particularly popular due to St. Kilda's appeal as a tourist and leisure destination, thanks to its beaches, cafes, and vibrant nightlife. Properties near the beach, The Esplanade, and Acland Street are especially sought after for short-term stays.

On the other hand, the long-term rental market is fueled by professionals, small families, and students attracted to the suburb’s lifestyle, proximity to the city, and local amenities.

The profile of potential tenants in St. Kilda is diverse. For short-term rentals, you're looking at tourists, visitors, and even locals seeking a 'staycation'. These tenants typically prefer furnished apartments that offer convenience and a taste of the local lifestyle.

For long-term rentals, the tenants are often young professionals, small families, and students. These groups tend to look for one or two-bedroom apartments, or smaller houses, and they value proximity to public transport, shops, and entertainment options.

Specific areas within St. Kilda that are popular for rentals include the vicinity of Acland Street and Fitzroy Street, known for their dining and shopping scenes, and areas close to St. Kilda Beach. These locations offer the quintessential St. Kilda experience, making them attractive for the rental market.

Amenities that can help reduce vacancy and attract tenants include modern appliances, internet connectivity, proximity to public transport, parking facilities, and access to green spaces.

Properties that offer a balcony or outdoor space are also highly valued, especially in the context of the pandemic, where people appreciate having their own outdoor area.

In terms of potential returns on investment, properties in St. Kilda have historically performed well, thanks to the consistent demand. Estimations of rental yield can vary, but generally, properties in prime locations like near the beach or main commercial strips can fetch higher rents.

It's also worth noting that well-maintained properties, or those offering unique features like great views or larger living spaces, can command a premium.

Regarding the type of properties gaining more demand and potentially better yields, modern, well-located apartments, especially those suited for short-term rentals, are increasingly popular. They cater to the growing trend of people seeking flexible, lifestyle-oriented living options.

Additionally, as more people work from home, properties with an extra room or a dedicated workspace are becoming more desirable, potentially offering higher rental yields.

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Is it easy to buy a property as foreigner in St. Kilda?

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 in St. Kilda, Melbourne as a foreigner comes with a specific set of regulations and considerations.

Firstly, Australia has certain regulations for foreign property buyers, which are administered by the Foreign Investment Review Board (FIRB). Foreign buyers typically need FIRB approval before purchasing property in Australia.

This process involves an application fee and a review to ensure the investment is in line with Australian property laws. The FIRB is particularly focused on investment in new housing developments, as the Australian government encourages foreign investment that contributes to new housing stock.

When it comes to the purchasing process in St. Kilda, it's similar to other parts of Australia. The process generally involves property viewing, making an offer, getting a property valuation, applying for FIRB approval, and then proceeding to the property settlement.

It's important to be aware that the Australian property market often operates through auctions, which can be a unique and competitive method of purchasing property for those unfamiliar with it.

There are risks associated with property investment in any location, and St. Kilda is no exception. Market fluctuations can affect property values, and as with any investment, there's no guarantee of profit.

Moreover, being a popular area, St. Kilda can have higher property prices compared to other Melbourne suburbs.

Another risk for foreign investors is the potential changes in foreign investment policies or tax laws which can impact the profitability and feasibility of the investment.

Common pitfalls for foreign buyers in Australia include underestimating the additional costs involved, like stamp duty, legal fees, and FIRB application fees. Also, navigating the auction process can be challenging for those unfamiliar with it.

It's a fast-paced and transparent method of buying property but requires understanding of the local market dynamics and bidding strategies.

Working with a local real estate agent and, importantly, a lawyer, is highly recommended. They can provide invaluable insights into the local market, assist with the legalities and paperwork, and guide you through the FIRB application process. A local agent can also help navigate the auction process and negotiate deals on your behalf.

As for exit strategies, property investors in St. Kilda generally have a few options. These include selling the property at a profit, leasing it out for rental income, or holding onto the property as a long-term investment, hoping for capital growth.

The choice of strategy would depend on the investor's personal goals, market conditions, and the performance of the property market in St. Kilda.