South Melbourne, VIC
Median House Price: $1,175,000
Current Yield (houses): 3.1%
Average annual growth (houses): 5.0%
Median Unit Price: $591,400
Current Yield (units): 4.7%
Average annual growth (units): 2.2%
With the national decline, South Melbourne had suffered alongside the capital city as auction clearance rates plummeted in the first few months of 2019. However, the suburb’s fortunes have turned around very quickly.
“Auction clearance rates in early 2019 for houses in South Melbourne were down to 50%, but towards the end of 2019 they’d risen back up to over 75%,” reports Jeremy Sheppard, head of research at DSR Data and LocationScore.
This has much to do with property supply levels staying low during the down period, which helped sustain high levels of demand.
“Prices have retracted about 30% over the last two years, presenting what buyers now consider to be bargains. Moreover, supply is tight, with the percentage of stock on market never rising above 1% for the last three years,” he says.
The rental market has been extremely tight as well, causing rent rates to shoot up to the benefit of investors who are able to reap an average return of 4.7% from units.
“Vacancy rates have been consistently low for houses over the last couple of years at around 1%. That has placed pressure on rents which have climbed over 7% in the last year,” Sheppard concludes.