Melbourne's property market is one of the most popular for investors in Australia, known for its strong capital growth and rental yields. With a population set to increase to 8 million by 2051 according to projections, demand for housing will remain high. This makes Melbourne real estate a relatively safe long term prospect for investors.
Choosing the right suburb to invest in is key to maximizing your returns. The top factors to consider are population and job growth, infrastructure development, access to amenities, affordability, and yields. Taking these into account, here is our list of the top 10 suburbs for real estate investment in Melbourne:
1. Box Hill
Located 14km east of the Melbourne CBD, Box Hill is a major hub for the booming east region. With its central transport interchange railway station, Box Hill has become increasingly attractive over recent years. Major infrastructure upgrades such as the newly completed town center redevelopment provide ample retail, restaurants and public spaces.
Major companies like NAB, Taxi Services Victoria and WorkSafe Victoria are headquartered here, with white-collar employment projected to rise over the coming decade. Box Hill also sits among prestigious schools including Box Hill High School and Box Hill Institute.
With a median house price of around $1.3 million, Box Hill provides relatively affordable access to amenities compared with suburbs closer to the city center. Strong rental yields around 3% and booming development make Box Hill a compelling suburb for investors.
2. Reservoir
Reservoir is located just 9km north of the Melbourne CBD. It has easy access to the city via public transport, sitting on the South Morang railway line. The suburb borders Darebin Parklands which spans 33 hectares of open space.
There has been strong property price growth over the past decade thanks to significant housing development and infrastructure spending. The peripheral location of Reservoir has provided relatively affordable prices that appeal to owner-occupiers and tenants alike. With house's median price around $900,000 and units around $530,000, yields remain attractive at over 3%
Ongoing gentrification is projected to continue, with new cafes, restaurants and improved facilities lifting the profile of Reservoir. This should support sustained capital growth into the future.
3. Brighton East
For investors seeking rental properties, Brighton East is one of Melbourne’s most lucrative suburbs. Located just 11km south east of the CBD, it delivers excellent rental returns thanks to good amenities and proximity to beaches.
Brighton East unit prices median around $635,000 while houses sit at $1.62 million. Strong demand from tenants working in Melbourne and the Bayside area has led to robust median rental yields of nearly 4% on units.
With a range of bars, boutique shops and cafes along with access to elite schools, Brighton East continues to expand and gentrify. Given high demand for rental accommodation across all demographics, this is a suburb where minimal vacancy periods can be expected for landlords.
4. Frankston
Frankston offers affordable prices with Melbourne's median house price now over $1 million. Located on the eastern shoreline of Port Phillip Bay, Frankston is a major regional hub 39km south east from Melbourne's CBD.
Major health infrastructure like Frankston Hospital provides a high level of medical services. Frankston is also home to major education facilities such as Monash University's Peninusula campus, Chisholm TAFE and more. A trio of large shopping centers in Bayside, Karingal and Frankston Power Centre provide ample retail options.
Significant infrastructure investment including major highway upgrades and railway electrification works are improving overall liveability. With median prices around $750,000 for houses and $474,000 for units, yields remain high at over 4% in many pockets. This makes property in Frankston very appealing for investors seeking lower price points.
5. Craigieburn
Craigieburn is rated as one of Melbourne’s fastest growing suburbs. Located 29km north of the CBD, it spans outwards from the metropolitan area into a newly developed corridor. Being at this leading edge, most property in Craigieburn is newly built, under 15 years old.
Offering very affordable prices for outer suburban Melbourne, Craigieburn appeals to first home buyers. With median house prices around $600,000, investors can secure strong yields upwards of 4%. Given the vastly undersupplied status of housing on Melbourne’s northern fringe, tenants have limited vacancies and options elsewhere.
The wider region is earmarked for population growth and commercial expansion. Craigieburn Central shopping centre has recently been expanded, and further retail developments are planned. This makes the area well suited to investment in relatively low cost housing for the rental market.
6. Hawthorn East
Hawthorn East is an established, leafy inner east suburb, located just 7km from the Melbourne CBD. With its grand Victorian era homes and proximity to Swinburne University and Glenferrie Road's vibrant shopping strip, Hawthorn East is perennially popular. The suburb promises strong capital growth off the back of high buyer demand.
The suburb is well known for its top tier private schools including Auburn High School, Swinburne Senior Secondary College and Methodist Ladies College. Its superb liveability supports strong demand from owner-occupiers and tenants alike, ensuring secure long term growth prospects.
At the premium end, some houses now fetch upwards of $5 million dollars. However overall median prices sit around $2.3 million for houses and $760,000 for units. While yields are moderate at 2-3%, Hawthorn East promises excellent long term growth.
7. Narre Warren
Narre Warren is one of Melbourne’s key growth corridor suburbs, located 33km south-east of the city. Sitting right alongside the Monash Freeway and South Gippsland Highway, it is earmarked as the major transit hub for the south east region.
Narre Warren will have two new train stations built under level crossing removal works to boost accessibility. The wider Casey-Cardinia region has been designated as a specialised health, education, logistics and employment hub. Narre Warren will become a central node, with ample affordable land for residential expansion.
Offering great property prices for those on a budget, median house and unit prices sit below $600,000. Narre Warren appeals for relatively low buy-in costs while offering the promise of above average long term growth amid a strategic south east development drive.
8. Glen Waverley
The suburb of Glen Waverley is located 18km south-east of Melbourne, mid-way along the Monash Freeway corridor that connects the city with Dandenong. Often branded as ‘Little Taipei’, the area has a large Asian population, especially Chinese Australian residents. These demographics help support demand from international students attending nearby Deakin and Monash universities.
With two centrally-located railway stations, Glen Waverley has one of Melbourne’s largest shopping centers at The Glen. Home to iconic entertainment brands like V-Max cinema and Timezone, The Glen remains a major suburban attraction.
New precinct developments are also bringing apartment towers, with over 3,000 dwellings added in recent years. With median house prices around $1.65 million and units $615,000, good rental demand underpins yields of 3-4%. Given scope for more medium and high density builds, Glen Waverley remains popular for buyers.
9. Caroline Springs
Caroline Springs is one of the western region’s most prominent growth areas. Located just 21km north-west of central Melbourne alongside the Western Highway, it spans out past the fringe suburbs. Excellent road connectivity via the M80 Ring Road provides rapid access back into the city and towards nearby airports.
With greenfield sites and ample vacant land, developers have constructed thousands of new homes over the past decade in Caroline Springs. Being at the metropolitan edge with lower density, housing remains very affordable compared to most suburbs closer to Melbourne. Median house prices are around $650,000 with strong rental yields still over 4%.
Significant infrastructure like the Bridge Road Sports Precinct and town center retail expansion provide new facilities for residents. With the whole corridor designated for significantly more residents, Caroline Springs will be central to booming western suburbs.
10. Wheelers Hill
Wheelers Hill is an established, affluent suburb 22km south-east of Melbourne's CBD. Blending peacefully among the Dandenong Ranges foothills, it combines lush greenery with quick access back downtown. The area is seen as a hidden gem, with prestige property backing onto native parklands.
Health infrastructure includes major hospitals like Monash Medical Centre and Jessie McPherson Private Hospital that bookends the suburb. Wheelers Hill also holds a number of leading private schools adding to liveability. With median house prices approaching $1.5 million, the exclusive suburb profiles strongly for growth among aspirational families.
While more expensive than Melbourne’s median, Wheelers Hill has delivered excellent returns through sustained capital growth. With a track record of steady, above average gains compared to most regions, Wheelers Hill remains popular for higher wealth individuals.
FAQs
Here are answers to some frequently asked questions about investing in Melbourne real estate:
What are the best suburbs for rental returns?
Some of the best suburbs for rental returns are Brighton East, Frankston, Craigieburn and Narre Warren. These areas tend to have higher rental yields of 4% or more due to strong tenant demand.
Which areas have the highest growth prospects?
Suburbs forecast for above average price growth include Box Hill, Reservoir, Hawthorn East, Narre Warren and Caroline Springs. These areas are set to benefit from significant infrastructure and development works.
What suburbs still offer affordable investment properties?
More budget friendly suburbs for investors include Frankston, Craigieburn, Narre Warren and Caroline Springs, where median house prices are below $750,000. These areas can still deliver solid yields and good potential returns.
Are there any suburbs best suited for commercial real estate?
Box Hill and Glen Waverley stand out for commercial real estate investment, set to become key activity centers with new infrastructure and growing populations driving business demand.
What suburbs combine growth with rental returns?
Brighton East, Reservoir and Wheelers Hill balance both steadily rising capital growth with strong rental yields above 3% for more balanced real estate investments.
