Is It Worth Buying an Apartment in Melbourne?

Melbourne is a lively and interesting metropolis known for its laneway culture and diverse array of eateries, pubs, and art galleries. You might be wondering what qualities to seek out and which parts of town offer the most to potential buyers in terms of liveability and investment chances if you're considering moving there or buying an apartment there as an investment.

In this blog, we explore the complexities of investing in an apartment in Melbourne and the variables that make it a tempting choice for homebuyers and investors. 

Rising Interest In Melbourne City Apartments

The vacancy rate and the quantity of houses available for lease have reached historic lows, according to research, making it more difficult than ever to locate a rental in Australia. Since the number of rental properties advertised nationwide decreased by about half last year, a shortage of available units has played a significant role.

Between 2007 and 2008, Melbourne witnessed the most sustained period of rent rise. With five consecutive quarters of increases, the rental vacancy rate in Melbourne is at 1.4%, near record lows and far lower than its peak of 5.6% in December 2020.

In addition to this, the demand for apartments in Melbourne has been steadily increasing over the last ten years. A median apartment price of $630,000 was recorded in the city in June 2022, greater than in Adelaide, Brisbane, and Perth.

During the past ten years, apartment prices have demonstrated a healthy long-term increase, with an average annual appreciation rate of 4.0 per cent. Central Melbourne is experiencing a declining pipeline of new stock over the next five years, causing new apartment buildings to attract a premium above the market that ranges from 11 to 13 per cent.

Melbourne will have a strong demand for new apartment developments from 2020 to 2040 due to the city's projected 3.1% yearly population growth. Nearby office space, amenities, parks, and public transportation are all within walking distance for CBD residents. 

Why Should You Purchase An Apartment?

Apartments are a good investment option because they are inexpensive and require little maintenance. There has been a shift from renting to buying in Australia and other developed nations. Buying something puts an end to renting and gives you ownership. Also, having an apartment of your increases your chances of flipping it for a profit.

Secondly, homebuyers gravitate towards more compact dwellings for convenience or out of pure economic need. The typical household size has declined due to many people's decision to delay marriage. This opens the door for investors with smaller families to consider city residences.   

Third, city life is convenient for apartment residents because of the public transportation, lifestyle choices, and quick access to emergency services. You may enjoy this luxury in many Melbourne areas without experiencing the stifling urban density. Having it both ways is like having a dream come true. 

Additionally, the value of houses in Australia is on the rise. The demand for affordable housing will keep increasing due to immigration and population expansion. The value is expected to rise fifteen per cent annually in Melbourne, so there's no need to worry if you're late to the game. 

Reasons To Buy An Apartment In Melbourne

Melbourne is a stunning city constantly improving and has many safe suburbs. Property prices here are consistently high, as they are in most of Australia's main cities. Here are a few reasons you'll adore living in Melbourne and consider purchasing an apartment here.

Convenience

Living in a city is about location, alternatives, and convenience. Flats in Melbourne are ideal for anyone looking for a convenient location, as many are near restaurants, stores, and public transportation. Young professionals will find Melbourne an ideal destination to live, work, and play because of the abundance of lifestyle alternatives available in the city's apartments.

A Rewarding Choice.

The purchase of apartments in the city is a move that is both astute and lucrative. Most people who live in these houses are young professionals and families from various walks of life. As the typical family's size drops, profit on the growing demand for more compact and energy-efficient homes. 

No Need To Spend Much.

The current market is ideal for homebuyers due to the high demand for affordable properties in Australia, which has increased property values. Even if you miss this chance, you can still find reasonably priced flats in Melbourne. It would be best if you didn't wait around because real estate in Melbourne is increasing in price by 15% yearly.

How Do You Find Quality Residential Apartments?

Here are a few things to consider if you're looking to buy an apartment in Melbourne's central business district from a lifestyle and investment perspective. 

Suburbs

There are more communities within Melbourne than the fourteen declared suburbs that make up the municipality. The villages are increasingly split as you traverse the inner and outlying city districts. Communities in Melbourne's outer areas are less densely populated and farther from major thoroughfares. More entertainment venues and conveniences are located in the core metropolitan suburbs.  

Fitzroy, St. Kilda, and Ascot Vale are three of the most well-liked inner Melbourne neighbourhoods among first-time homebuyers. On the other hand, Carlton and similar neighbourhoods are more in line with the normal glamorous city life, which can be expensive. Apartments in Fitzroy are more popular, although Carlton condos cost more overall. 

On the outskirts of Melbourne are a few communities, including Clayton, Oakleigh, and Deer Park. In addition to having driveways, yards, and other suburban advantages, the apartments in this location give the impression of being farther removed from neighbouring buildings. 

Many new purchasers choose the comparatively peaceful outer Melbourne life, although commuting to the city is harder. Though they may not experience the same surges in population as their inner-city counterparts, these flats continue to be popular among those in their golden years. 

Reasonable Cost

The median prices of apartments and homes have been rising in tandem with the overall worth of the property market. The going rate for a Melbourne condo is $468,400 as of the beginning of 2022. Apartments often come with one or two bedrooms, although the price varies from model to model.  

In Melbourne, you can pay roughly $350,000 for a one-bedroom apartment and around $530,000 for a two-bedroom. Location and amenities are major factors in determining a property's price. While it's easy to locate flats for cheaper than these prices, it might be wise to invest in a home in great demand rather than a cheap one with less potential. 

Saving money on the price of an apartment gives you more money to spend on furnishing and maintenance, which ultimately increases the home's worth over time. To maximise your investment, consider all the possibilities before committing your finances to a base price.

Amenities

The wide variety of facilities offered by many modern property developments is one of the main advantages of living in a luxury apartment. Beyond the apartments, tenants can access amenities that offer extra luxuries, such as places to exercise, socialise, and unwind. Amenities such as fitness centres, pools, lounges, movie theatres, and more fall under this category.

You should prioritise complexes that provide the most important amenities to your lifestyle while searching for high-end apartments for sale in Melbourne. Look at a precinct with meeting spaces and libraries if you do most of your business from home. If you're looking for a place to work out, search for wellness spaces. If you're planning an event, find a place with private dining rooms to accommodate more people.

The hotel features a variety of services, such as heated swimming pools, fully equipped gyms, theatres, specialised wine cellars and dining rooms, calm garden terraces with barbeque capabilities, a huge yoga and pilates studio, a library, and a great deal more.

Location

A city known for its laneway culture and diverse array of eateries, pubs, and art galleries, Melbourne is full of life and energy. Downtown, you'll see a mix of modern and historic buildings along tree-lined streets and tram lines. The Yarra River, which flows southeast of the central business district, and the city's many parks and other green areas offer respite from city life. 

In addition to the many dining and shopping establishments in the Melbourne Central Business District (CBD), the Paris End of Collins Street, the Bourke Street Mall, Melbourne Central, and the Emporium are all located inside the CBD. Several high-end lifestyle and contemporary brands call this cluster of downtown precincts home. Marvel Stadium, on the outskirts of Melbourne's central business district, is great for big events like concerts, AFL matches, and other sporting contests.

Apartment Layouts

To improve your odds of finding an apartment perfect for you, search for complexes that provide multiple floor plans. 

Apartments with one, two, or three bedrooms are increasingly widespread in many buildings. Balconies and study nooks are available as extra features. Size, storage, location of bedrooms and bathrooms, amount of natural light, living space, and more should all be considered. Consider the apartment's orientation and the distance to neighbouring buildings if views are also significant.

It is also essential to give some thought to the amenities that are included in the property. Look for apartments with high-quality window furniture, floors, appliances, fixtures, and fittings. When you buy an apartment from a developer with a great track record and reputation, you may have peace of mind knowing that past buyers are satisfied with their experience and investment. 

Walkability & Transportation

An extensive system of buses, trams, trains, footpaths, and bike lanes serves Melbourne's central business district. Within the City Loop, Flagstaff and Southern Cross Stations serve the western end, giving easy access to stations throughout Greater Melbourne and regional Melbourne.

Especially if you do not have a car, it is essential to consider the proximity of the apartment you are searching for in Melbourne's central business district to public transportation.

Trains serving Greater and Regional Victoria stop conveniently at Southern Cross Station, across the street from West Side Place. Spencer Street and Lonsdale Street are tram stops in Melbourne's Free Tram Zone, so getting around the central business district is a breeze.

Walks, laneways, and bike routes abound in Melbourne, making it an ideal destination for those who want to get about on two wheels. 

Accessibility, Parking, And Emergency

Apartments without accessible features will attract a much smaller pool of tenants and be worth less in the long run. As a similar point of interest, getting a parking spot for a unit makes it a significantly more appealing commodity. If feasible, put money into buildings with elevators, a parking garage nearby, and accessible equipment for wheelchairs. 

Moreover, Victoria has recently experienced problems with the outside cladding of homes, leading to many buildings being considered fire dangers. Only after the homes in question have been remodelled and made more secure is it prudent to refrain from investing in high-risk properties. 

The Risks of Buying an Apartment in Melbourne

The Melbourne real estate market is undeniably strong, with analysts projecting annual house price increases of more than 15%. Apartments can be risky investments due to negative equity, cramped living quarters, high body corporate fees, slow appreciation in value, bad placement, and low rental returns.

Small Floor Plans

Because larger parts of the market, such as families, frequently want large living spaces, the number of people buying and leasing your home may be restricted if it is a small apartment. A bigger deposit of twenty to thirty per cent of the property's worth may be required by lenders for homes that are smaller than forty square metres in size. This is something that you should be aware of. 

Capital Growth 

Capital growth rates can vary greatly among Melbourne's neighbourhoods despite the city's generally robust real estate market. Before making a purchase, educate yourself about the area you're interested in. Considerations such as proximity to parks and recreation centres, ease of use of public transportation, and other such amenities can influence the likelihood of future expansion. Apartment dwellers, in particular, should be wary of the overstock problems that might arise in densely populated regions due to the proliferation of new high-rise buildings. 

Rental Yields 

When purchasing an apartment to invest in real estate, it is important to investigate the present and historical rental yields of apartments comparable to the one you are purchasing. There is also the possibility of conversing with local property managers to discuss vacancy rates and the kinds of tenants you anticipate.

Negative Equity 

This situation arises when the property's value falls short of the mortgage. As a result of an oversupply, property values in densely populated areas, including high-rise projects and the central business district (the "inner city"), might fall. Do your homework before buying an apartment, just like any other investment. 

Finance 

Arranging your money before purchasing is vital to ensure a trouble-free transaction. By dealing with a knowledgeable mortgage broker who will assist you through the process, you can obtain the best home loan suitable for your financial condition. Avoiding problems and wasting time with this preventative measure pays off.

How Much Money Is Required In Melbourne To Purchase An Apartment?

According to the latest data research, Apartments in Melbourne are selling for a median price of $546,800, up 2.3% from February 2022 to January 2023. Remember that an apartment's square footage significantly impacts its price. According to statistics, the current median price for a one-bedroom apartment in Melbourne is $390,000. The median price of a three-bedroom apartment is $998,000. On the other hand, a two-bedroom flat is $629,000. In Melbourne's ever-changing real estate market, these numbers highlight how size matters when calculating apartment pricing. 

Conclusion

Melbourne is a busy city known for its street culture, art galleries, pubs, and restaurants with a wide range of food. It's hard to find rental homes in Australia because the vacancy rate and the number of houses for rent have both hit all-time lows. Between 2007 and 2008, rents went up 1.4% in Melbourne, which was the longest amount of time. Over the last ten years, there has been a steady rise in demand for apartments in Melbourne. In June 2022, the typical price of an apartment was $630,000.

Apartments are a good investment because they are cheap and don't need much upkeep. People in Australia and other developed countries are buying homes instead of renting them. This gives buyers more control over their homes and increases their chances of selling them for a profit. From 2020 to 2040, there will be a strong need for new apartment buildings because the city's population is expected to grow.

There are many good reasons to buy an apartment in Melbourne, such as the fact that it is convenient, a good choice, and you won't have to spend a lot of money. Australia has a lot of people looking for cheap homes, which has driven up property prices and made the market perfect for buyers.

Buying a home that is in high demand instead of a cheap one with less potential can raise the value of your house over time.

There are a lot of great things about living in a luxury apartment in Melbourne, like exercise centres, pools, lounges, and movie theatres. To find the best apartment, think about things like location, features, and style. The Central Business District (CBD) of Melbourne is home to many high-end living and modern brands. Marvel Stadium is a great place for big events.

Look for apartment buildings with different floor plans that have study nooks, balconies, and one, two, or three bedrooms. This will help you find an apartment that fits your needs. Size, storage, location, natural light, living area, and amenities are some things to think about. It is important to have high-quality window furniture, floors, tools, fixtures, and fittings.

In Melbourne's central business area, being able to walk and get around are very important. Buses, trams, trains, footpaths, and bike lanes make it easy to get to stations all over Greater Melbourne and regional Victoria. It's also important to think about how accessible, parking, and emergency features are.

Analysts think that house prices will rise by more than 15% each year in Melbourne, which means that the real estate market is strong. Bad placement, negative equity, high body corporate fees, slow value growth, and low rental returns are some of the things that can make apartments dangerous investments.

Fewer people may be able to buy or rent homes with small floor plans, and lenders may demand a bigger down payment of 20 to 30 per cent of the home's value. Different parts of Melbourne can have different capital growth rates, so it's important to learn about the area before you buy.

You should look into rental yields, and if the house is worth less than the mortgage, this is called negative equity. To avoid problems and waste time, you should make sure your earnings are in order before you buy an apartment.

To sum up, Melbourne's real estate market has a wide range of features, locations, and business chances.

Content Summary

• Melbourne is known for its vibrant culture, including laneways, eateries, pubs, and galleries.
• The city offers liveability and investment opportunities for potential apartment buyers.
• Recent research indicates a historic low in the availability of rental properties in Australia.
• Melbourne's rental vacancy rate has significantly dropped to 1.4%.
• The demand for apartments in Melbourne has consistently risen over the last decade.
• In June 2022, the median apartment price in Melbourne was higher than in Adelaide, Brisbane, and Perth.
• Apartment prices in Melbourne have seen an average annual appreciation of 4.0%.
• A shortage of new apartment stock in central Melbourne is expected in the next five years.
• Melbourne's population growth is projected at 3.1% annually, increasing demand for apartments.
• Apartments in Melbourne are seen as affordable and low-maintenance investment options.
• The shift from renting to buying is a trend in Australia, emphasising ownership.
• Smaller dwellings are increasingly preferred due to economic necessity and lifestyle choices.
• Melbourne offers convenient city living with access to public transportation and amenities.
• The value of houses in Australia, including Melbourne, is expected to rise significantly.
• Melbourne's safe suburbs and high property prices make it an attractive place to live.
• Apartments in Melbourne offer convenience, being close to amenities and transport.
• Buying an apartment in Melbourne is considered a smart and profitable investment.
• The demand for affordable housing in Australia boosts property values, including in Melbourne.
• Melbourne's suburbs offer diverse living experiences, from vibrant city life to quieter areas.
• Inner suburbs like Fitzroy, St. Kilda, and Ascot Vale are popular among homebuyers.
• Outer suburbs offer more space and are popular among those preferring a quieter lifestyle.
• The median price for a Melbourne apartment was $468,400 at the beginning of 2022.
• Prices for one-bedroom apartments in Melbourne start around $350,000.
• Investing in high-demand properties is recommended over cheaper, less promising ones.
• Modern apartments in Melbourne come with a variety of amenities enhancing lifestyle.
• When searching for apartments, consider those with amenities that match your lifestyle.
• Melbourne's laneway culture and architecture contribute to its unique charm.
• The CBD offers numerous dining, shopping, and entertainment options.
• Apartment complexes with multiple floor plans cater to different preferences.
• The quality of fixtures and fittings in apartments can significantly affect their value.
• Melbourne's public transportation system supports easy access across the city.
• Accessibility features and parking availability enhance an apartment's appeal.
• Victoria has experienced issues with exterior cladding on buildings, emphasising the need for caution.
• The Melbourne real estate market shows strong growth, but apartment investments carry risks.
• Small apartment sizes may limit market appeal and require larger deposits.
• Capital growth rates vary across Melbourne, affecting investment potential.
• Investigating rental yields and consulting property managers can offer insights into potential returns.
• Negative equity risks are higher in densely populated areas with an oversupply of apartments.
• Arranging finances before purchasing is essential for a smooth transaction.
• The median price for apartments in Melbourne has risen to $546,800, showing market growth.
• Apartment pricing in Melbourne varies significantly with size, affecting affordability.
• The current median price for a one-bedroom apartment in Melbourne is $390,000.
• A two-bedroom apartment in Melbourne has a median price of $629,000.
• Three-bedroom apartments in Melbourne are priced at a median of $998,000.
• Size plays a crucial role in determining apartment pricing in Melbourne's real estate market.
• Prospective buyers are advised to consider location, amenities, and apartment layouts.
• Investing in apartments near public transportation can offer convenience and accessibility.
• The choice of amenities should align with personal lifestyle needs and preferences.
• Understanding the risks and potential for negative equity is important for investors.
• Melbourne's dynamic real estate market offers opportunities for homebuyers and investors alike.