Latest / The Follio Property Podcast / Melbourne’s Hottest Investor Suburbs in 2025: where to buy for first-time owner scheme $950k | Ep 26

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Melbourne’s Hottest Investor Suburbs in 2025: where to buy for first-time owner scheme $950k | Ep 26 · The Follio Property Podcast

• 0:00
  The Melbourne market is heating up. Jeez, it's changed a lot over the last six months. Today we're going to dive in to five of our approved 36 suburbs for houses under 950 in Melbourne where we see the most value. We've got the first home buyer scheme kicking in. The benchmark for Melbourne is 950k.
• 0:17
  That will do double-digit growth issues. Yeah, comfortably. What's your opinion on some of those frustrations? Are they valid? Land tax is the biggest misconception in the Melbourne market. Suburbs I'm keen to probably address today. Berwick, Sunshine West, Ferntree Gully, Carham Downs and Laylaw. Why these suburbs we like from a house perspective? Well, they're on our approved suburb list, right? On our approved suburb list.
• 0:39
  You're listening to the Folio Property Podcast. I'm Rhys Bettle and I'm here each week with my co-host, Lachlan Delahunty. If you're enjoying the podcast, do us a favor, hit like, hit subscribe and leave a comment so we can grow this channel. Listeners, please do comment. We're really enjoying that and it's helping us to tailor this to you as a listener. So the more comments, the better these podcasts and the more we can answer your questions. Lachlan, the Melbourne market is heating up. We've just got back, Rhys, and geez, it's changed a lot over the last six months, hasn't it?
• 1:09
  It has. We've gone back, what, four or five times now in the last six months, and it feels like every trip, the price points are moving week by week at this stage. Yeah, they are. And speaking to the agents on the ground and getting that live data, it's really interesting to see how hot it is and how sub-markets, I don't think I've seen a market before.
• 1:30
  where the sub-markets, so the difference in suburbs is so great. It's really a two-speed market. And there's markets that are really outperforming, but there's still some stagnation at different levels, right? Yeah, I think you've used the word with me, patchy, and that sums it up beautifully. There is markets, like you said, performing...
• 1:47
  historically bad and still bad this year, whereas there's markets at the moment we're looking at that will do double digit growth this year. Yeah, comfortably. And that's what I think the misconception with Melbourne, people just use the RP data monthly index and it's doing like 0.2%, 0.3%. And so they're, okay, markets, maybe we'll take a position next year. But the reality is in the buy suburbs, our approved suburb list, we'll see well over double digit growth. And-
• 2:13
  I don't think the macro data that gets reported has been reflective of what's actually happening on the ground. And I think people can just, you know, people that are watching and participating in the market will see that from advertised price to sales result. There's typically somewhere between a 10% to 15% uplift on what's been advertised as the advertised price to what it actually goes for under the hammer. Yeah, and I think we referenced this on our Melbourne market update last week, but you've only got to look at...
• 2:43
  Sorry, you've only got to look at the auction clearance rates to see there's a massive improvement in terms of stuff selling under the hammer as well. But as you said there, it's definitely very different depending on a micro level, depending on which suburb people are investing in at the moment.
• 2:57
  If we looked at the 12 months, as we did in our last podcast, the 12-month auction clearance rate data, it's almost like the perfect trend. Coming from a base of as low as 40% this time last year to improving back in the last year, 50%, 60% to ticking up 65%, 70% early in the year, now consistently seeing 70% to 80% and sub-markets producing 90%, 95% auction clearance rates.
• 3:24
  It's a sign that Melbourne's, everyone's like, when's Melbourne going to hit the bottom? Yeah, that was 12 months ago. When we see some of the other people post market updates, you hear the negative connotations or the frustrations on land tax, compliance costs, these outer suburbs that people are pushing, like the Meltons of the world that we've spoken about. What's your opinion on some of those frustrations? Are they valid?
• 3:48
  Land tax is the biggest misconception in the Melbourne market. Everyone's saying it's just an easy throwaway headline that gets a lot of attention. And people are like, ah, no, the land tax, the land tax. Have you looked into it? Do you actually know the difference? It's actually $50 a year more when you take into the fact that the MRIT, the Metropolitan Regional Improvement Tax, that's a mouthful. That is a mouthful. But that is a land tax only segmented to Perth. And everyone pays it who's got an investment property.
• 4:16
  So people don't realise that the land tax problem in Melbourne is more to tax the wealthy, those that have land banked, those that have got lifestyle properties down on the Morning Peninsula, Portsy, et cetera. It's taxing the rich. Yes, land tax is assessed on the land ratio of the property. So there is going to be fluctuations. I think it's a huge misconception, Rhys. And that negativity is just getting thrown around from people who don't really fundamentally understand the market.
• 4:46
  When we were there last week, we obviously spoke with our team based over there, spoke with agents. And I think the overall sentiment, and we've spoken about this before on some recent podcasts, the first home owner scheme increasing their cap up to 950 in Melbourne is driving a lot of owner-occupier activity, especially around that 800 to 950 level.
• 5:08
  Mark, and I'm talking houses for the purpose of this podcast. We'll purely focus on houses, I should say. In terms of suburbs, I'm keen to probably address today. Berwick, Sunshine West, Ferntree Gully, Carrum Downs and Laylaw. What we'll unpack today is talk through why these suburbs we like from a house perspective. Well, they're on our approved suburb list, right? On our approved suburb list. So do you want to talk through this approved suburb list?
• 5:36
  Yeah, so essentially it's our, we've got 36 in Melbourne, which are approved by our business that our buyers agents on the ground have the ability to buy in these suburbs. And that's all through our prop stack data. So there's about, in total, there are 42 metrics that underpin the data that drive these markets. And the obvious things, own occupier activities are really important things. So a percentage basis that we won't invest if there's more investors than there are own occupiers. Yeah.
• 6:05
  vacancy rates stock on market days on markets local school catchments infrastructure spending so these are the key some of the key data sets that underpin and obviously we meet on this on a fortnightly basis to understand these data sets which which drives our decision making
• 6:23
  Yeah, all right, let's kick start. So the first suburb we had on there is Berwick, a suburb. We know pretty well. We've looked, I guess, all aspects of Berwick, whether that's the established side, even some new build that we've seen. In terms of the median price in Berwick, it sits at $770,000 for a three-bed. Now, speaking with our local agents that are buying there,
• 6:47
  Stock we're looking at is well above the median price. And it is in a rising market, the median's always gonna be low. And we're looking at the better quality stocks. So from a price point that we're looking at, we're around starting point 830, up to 900. So probably more on the higher end of the scale for the first time buyer potentially. That is a 500 square meter block as a minimum that we're looking at in this area. Auction clearance rate above 60%, so roughly in line with, I guess, the Melbourne average.
• 7:16
  Very family-driven, though. So iron occupier over 80% in Berwick. Yeah, and why is that right? They call it the two-rack of the outer east. I don't know if that's an overstatement, but it's school catchment areas. You've got access to both lifestyle drivers as well as work drivers. So you're super close to the Clayton Precinct, which is the Monash University Precinct. For those that don't know, that precinct is the second largest area
• 7:42
  CBD in Victoria. So a lot of jobs out of there, the hospital, university, et cetera. And looking at the growth, last year when it was on its knees did 2.7% growth for the year. It's already done 5%, sorry, it's tracking to do 5% to 10% this year alone. So it's already got the drivers in place for some serious growth this year.
• 8:04
  And that's why we like and never underestimate the value of buying in own-occupier dominated areas. Because exactly last year, majority, 85% of the Melbourne market reported a loss. The ones that reported a gain were those that were heavily dominated by own-occupier activity. So yes, when there's a rising market, everything's going to be positive. Everyone's going to report growth.
• 8:26
  and then the wild west your mountains etc can say look you know we bought a property for 550 it went to 750 the moment there's a downturn that's when when the tide goes out you can see who's swimming naked so that's the analogy when the tide goes out you see who's swimming naked and that's what we want to look for it's all about capital growth and maximizing your uplift but it's also protecting downside and that's why i like a beric for that own occupier
• 8:49
  Yeah, and like the feedback we got from our, we get from our local buyers agent who works that area is, you mentioned there obviously, it's highly driven by families, really good schools there, freeway access. And from a investor standpoint as well, there are a lot of private sales there as well. So not always going under the auction hammer, which in a competitive market, where you're competing against owner occupiers or emotional and gonna spend more, there's a good advantage there as well from a private sale perspective.
• 9:16
  Okay, next up is Sunshine West, which is in the northwest. The Wild West, we've got one on our list. We should put a count of how many times we mentioned Melton today as well. I think we're at three already. In terms of medium house price for a three bed, so just so our listeners are aware, the metrics I'm looking at here is a suburb kind of hotspot for houses. Three bed to be specific and focusing on a bit of a land component, so 500 square meters.
• 9:42
  This is not for your villas, units, your townhouses. This is specifically for established homes. Yep, correct. So you look at the medium data, it seems like it needs a bit of updating because it's coming at $685 for a three-bed. We know that's not correct. We know that's not correct. So where we see this as a valuable price point is probably anywhere between $830 and the $930 mark. You can still get in there for the sevens. For a strong land value asset, we have been purchasing in the sevens.
• 10:08
  Yep. Clearance rates are similar to Berwick, so along with the metro average, similar as well. Heavily driven by owner occupiers at 72%, with a lot of those being families. And very similar to Berwick as well in terms of the growth that we've seen. Already done 5.2% this year. These figures are probably a couple of months behind, so we're on track to do well over 10% growth.
• 10:30
  Yeah, we'll see that market do double digits this year. And the driving factor is there. And I know we probably hate on the West a little bit. And it's not a personal bias. It's just more the outer fringes that we're talking about. That's where I like sunshine.
• 10:44
  So what are we looking for? It's finally landlocked. You speak to me about Sunshine 10, 15 years ago, certainly not an area I would have considered investing. But fast track to 2025, it's fully landlocked. It's just considered one of the largest infrastructure nodes now. So it's got the largest regional train station. So essentially Geelong, Ballarat, Bendigo, all their sort of connecting lines feed into Sunshine. So it's a real central hub. And it's got the shopping centre. So...
• 11:13
  For the government, in terms of infrastructure spending per person in Sunshine, it's one of the highest in Melbourne. So that tells me that the government is supporting the area. They're going to continue to invest. So we're going to see more amenity, which is going to drive more own occupiers into the area. And therefore, we'll see price growth continue to surge.
• 11:32
  Yeah, bang on. I didn't know you had that knowledge in terms of the transport links, but feedback from our local agents is strong transport links, hospital redevelopment opportunities, and I think this is a very good suburb to outline the strength of migration into that area as well. There's a lot of multicultural families there as well, and it's helped sort of drive that community for the growth. Next up is Ferntree Gully, which is in the east. Medium house price, $830,000.
• 12:00
  We see some, and this is for three bet again, I've got to say, in terms of good assets that we're buying there at the moment that we see value, around $860 to $930 is a good price bracket for that. Auction clearance rate, well above the average. So it's pushing close at 80% in Fern Tree Gully. And owner-occupier, one of the strongest out of the ones we're going to highlight today at 80%. Any thoughts on Fern Tree Gully? Yeah.
• 12:25
  And it's landlocked, Rhys, and it's landlocked by Natural Reserve. So you've got the Dandenong Ranges literally on its doorstep. So that creates scarcity, but also creates lifestyle drivers. So 1,000 steps, huge driver, people go out there hiking. So you're not only just looking at people that want to enjoy the amenity and be still close to that eastern CBD district, but also get those lifestyle drivers, and that's where families want to live.
• 12:48
  Yeah, good schools as well, shopping, shopping precincts there as well, very popular, close to train stations as well. And when you look at the growth, it's started on its run in 2025. So it's positive ahead of the average, I'd say for Melbourne. But last year did 4.6% as well. So it's probably already in its sort of
• 13:08
  out of its recovery phase, I should say, and going on opportunity phase. And that's, we've taken a really strong position over the last 12 months. It's been on from day one, our approved suburb list. But like I said, they're starting to represent this probably some better opportunities out there now as we're discovering.
• 13:24
  And one of our colleagues who, like I said, is the buyer's agent for this particular area, it is a mixture of privates and auctions, predominantly auctions. The one thing she said to let the viewers beware or the listeners beware is there is a lot of competition from eastern suburbs around that are probably more at a higher price point that are now starting to move into private.
• 13:43
  And that's a sign of a strong market, and we expect that. Correct. Carum Downs is next, which is the southeast. In terms of medium house price, we're looking at just above $700. Where we're probably buying is more between $800 and $900K for a 500 square metre, three by two ideally in this price range. We have bought some three by ones that are on larger land components.
• 14:05
  Yeah. Owner Occupy as well, very strong on family. So 71% for Owner Occupy. Not as strong as Fern Tree Gully, but still well above that sort of range you should be looking for. And the big thing that excites us about Carum Downs, and we bought several last month actually, but it's already had 4.5% growth in 2025. So another one that is on track to do more double digits, I'd say, growth for 2025.
• 14:32
  There's a lot of information and noise and commentary coming in around Frankston. This has been the Frankston solution for us because we're finding that the percentage of investors going into Frankston is going to drive up that vacancy rate where Carham Downs is...
• 14:48
  predominantly own occupiers still so that's where we've taken advantage of that slightly closer to the city from frankston but you still get the benefit of the amenity and what's happening in frankston and that surrounding area also on the doorstep of the morning peninsula and just on the sort of you know cbd side of of for monash university and those sorts of things so
• 15:07
  For us, it's been a really good solution, again, for the same factors, own occupiers, low vacancy rates, high demand, coastal feel. And I think we've probably got another 12 months before we get pushed out of that market.
• 15:19
  Yeah, and I think the big thing is it is new first home buyers or young families in these areas as well. And when you're looking at the metrics of the home buyer scheme that we're talking about with the cap being 950, and those are probably typically a lot of the types of investors that will be entering that scheme, it seems like there's going to be a lot of quick growth in an area like Carham Downs as well. Yeah, we've seen that already. I don't think we're going to see that market slow down anytime soon.
• 15:43
  Yeah, one last thing is from an investor standpoint, mostly private sales in that area. So not as heavily driven on the auctions like a majority of Melbourne. We're buying at the moment, Reece, about 70% off market through that area. So that's positive for us. Not having to compete under the auction environment is always a benefit.
• 16:00
  Yep. Finally, the last one we're going to reference today on our house hotspots in Melbourne is Laylor in the north. Medium house price, just above 700 for a three bed. Stock we're looking at is probably around the 800K mark. We're getting well, we're still getting the sevens. We've had some early sevens. This is probably more of an affordable entry point. And again, a lot of the suburbs we're buying in is in the eastern part of Melbourne. This is a northern asset that's still very landlocked.
• 16:29
  We're not going up to the house and land package areas of, say, Donnybrook. The infrastructure's just not there yet. And the train lines are not there. And yes, it's an easy sell for investment groups. But I like it. It's established. It's landlocked. It does have some really good primary and secondary school catchments. And again, dominated by own occupiers. We're not seeing droves of investors driving up prices there. We're seeing local families drive prices. And that's what we want to look for in investment.
• 16:54
  100% is really strong on their own occupier percentage here as well at 75%. And auction clearance rates is just below 80%. So really strong on the- Good fundamentals. Good fundamentals there. In terms of a growth aspect, that actually did 6.2% positive in the green last year. This year, we're sitting at 1.8%. But we're predicting that that's going to have- There's a lot, especially with this-
• 17:17
  first home owner scheme cap, this will get a bit of a growth in the back of the year. We'll certainly push it. Yeah. I think it's probably one of the most underestimated markets in our buy suburb list, certainly at that affordability price point. And a lot of value add properties in this area as well. And I think that's where we're seeing- We like that as a strategy. Exactly. And I think that's where we're seeing a lot of value with some of our acquisitions in Laylaw particularly is there is some really good value add potential just for some of those older houses that you would find-
• 17:44
  So more for the active investor, those with more of a passive strategy probably won't appreciate some of the assets we're buying there. But certainly we like those ones where we can get in there, roll the sleeves up and add some value. Yeah. And it is competitive. Like I mentioned, the auction clearance rates at 79%. Majority of those sales are going to be through auction. So our role really as a buyer's agent is to try to source those off markets as much as we can. But it is heavily driven by auction markets in there.
• 18:11
  Yeah, we've had some success in recent months, but the market's heating up and agents want to choose to take things to auctions. We've just got to get better. Okay. So what's some of the... We've referenced five of the 36 that we have there on the approved suburb list for houses in Melbourne. What should people be looking at? Is it affordability, lifestyle, growth potential? What's the sort of common theme with some of these suburbs that we've mentioned that...
• 18:37
  Yeah, I think it's pretty obvious we've spoken heavily about the own occupier and we don't want to undersell that because that's, for me, it's all about risk mitigation and that's reducing your downside exposure. On the upside, infrastructure spending. So what we track through PropStack is the average dollar spent per person in a suburb.
• 18:58
  of government spending, both state and federal. So we can portion that out to give you context. On average, it's about two to two and a half thousand dollars per person that's getting spent in the suburb. We're buying in suburbs where that's north of $10,000. So what does that mean? Better schools, better facilities for childcare, better sort of amenity for shopping centers, lifestyle precincts. And what does that do? It just drives the amenity, the aesthetic, the driving factors of any estate or any particular suburb.
• 19:26
  And that sort of puts pressure on people wanting to live there, particularly families, and therefore drives value. So for me, what underpins a lot of what we look at is multiple factors, right? Because every data set tells a story. And when we see vacancy rates reduce from 6% to 0.5%, what's the story behind that? What has occurred? There's a new school going to the area that's going to...
• 19:47
  activate a particularly demographic that want to move to that school well we want to get ahead of the curb there's been a zoning change in a particular suburb so we're seeing a lot of activity in that area what's driving that okay let's get it let's get a handle on there and buy before the approvals come into place because we can get an artificial uplift so they're the things we're looking for on a local level
• 20:05
  Yep. And all those suburbs we mentioned, the price point we're looking at and looking at something with a decent land component, starting at $800, roughly to $800 to $900 as well. And I think all that being below the $950 cap for the first homeowner scheme, that's going to have a lot of demand activity from October. Well, it's probably already happening, I guess, with the sentiment we're hearing in the market at the moment.
• 20:27
  Yeah, you're right, Rhys, and that's what we're talking about today. Those suburbs are going to really benefit from the first-time buyer scheme. It's going to see an uplift. I think we'll see these price points surpass that $950 in a six- to 12-month succession because they're affordable, but they've got huge own-occupied demand, so you're going to see a real shift in those markets over the next six to 12 months.
• 20:51
  All right, just wrapping up then. So look, we've been over there last week. We have our finger on the pulse. It's heating up. As we said, it's patchy though. It's not every suburb or asset type which is going on a run. What would be your one bit of advice for buyers at the moment? Investors, yes, but also even just some first homeowners trying to take advantage of that scheme in Melbourne now. If they were looking to buy a house, what would be your advice to them?
• 21:14
  do your research because it is patchy. And when it's patchy, you can get underperforming assets. And we're seeing that at the moment. There's some suburbs there that have done negative growth this year. So research is going to be key. And researching the fundamentals that we're spoken about today is the best place to start. Thanks, Lachlan. You've been listening to the Folio Property Podcast.