Melbourne Property Market Insights: 2022 Edition

• Get the key demographic and economic trends for Melbourne's property market.
• The rental yield for different property types in Melbourne.
• Growth and clearance rates performance metrics for Melbourne.

Looking to buy or invest in property in Melbourne? We've crunched the key statistics to help inform your decision.

Read on for our complete guide to the Melbourne property market.

Market trend statistics

Melbourne is seeing a trend of double-digit growth in the property market, specifically for houses. However, the growth rate is still on the lower end when compared to other capitals.

Houses have outperformed units by over 10%. Units have shown an increase of 9.2% while house prices have risen 19.5% over the 12 month period. Melbourne's median house price has experienced an increase of $41,000. It has now become one of the regions in which the median house price exceeds $1 million.

Melbourne is still behind Sydney in holding the title of the ‘most expensive city’ in terms of property. However, some areas still see median prices below $700,000. In Melbourne, it’s commonplace for a house to sell within 34 days of being on the market. That’s an eight-day reduction from the previous year’s average.

In regards to clearance rates, Melbourne performs very well. The market saw an 84.8% clearance rate for a total of 3000 auctions. For the year 2020, 7,221 houses were sold in the Melbourne metropolitan area.

This is a fraction of the previous year and is probably due to the effects of COVID. However, employment levels have surged since then, and as a result standalone houses with quick access to the CBD are likely to keep performing well.

Melbourne’s average rental yield

Rental yield is an important metric for a property investor. It is calculated over the entire year and is expressed as a percentage of the value of the property.

Gross yield is the total rental income. Net yield is the yield after paying for the many fees associated with being a property owner/landlord. The following stats all make reference to gross yield.

The average rental yield for all houses in Melbourne as of November 2021 sits at 2.4%. For three-bedroom houses in particular, it is slightly higher at 2.6%. With respect to units, the average rental yield is 3.4%. The value is slightly higher for two-bedroom units specifically and is 3.6%. Over the past decade, the yields have decreased by approximately 1%.

Economic and demographic trends

Melbourne is home to more than 5 million people. Its population count is estimated at 5,061,439, an annual increase of approximately 1.89%. The population destiny sits at 500 residents per square km. There are currently 1.8 million households with the number projected to reach 2.4 million by 2036.

Looking specifically at the Melbourne CBD, the demographic is dominated by independent youth, accounting for around 64% of the residents and bringing the median age down to around 28 years old. 51% of the population are currently employed while 35% are studying towards a qualification.

Going back to the greater Melbourne area, family households constitute 83%. Coming in second are single households at 16%. The workforce also exhibits a well-educated population.

In terms of education, just about 27.5% of the workforce have degrees and most of the rest have some sort of post-school qualification. Some of the prominent industries include healthcare, manufacturing/retail sectors, finances, IT, and hospitality. The median dual-income family household earns a weekly income of around $1,542.

In terms of home ownership, 29% of residents fully own their properties. Coming in second place are those still paying off a mortgage at 34.3% and lastly are renters at 28.8%.

FAQs

Which suburb is best for an investment property in Melbourne?

In general, there is no one suburb that can ever be labelled the ‘best’ for investing in property. However, some suburbs have affordable investment properties while exhibiting great year-on-year growth in value.

McCrae is one of Melbourne's best investment suburbs. In terms of median values, $1,000,000 is the median price for a three-bedroom residence, with an average rental yield of 2.1%. The year-on-year increase in the median sale price is a substantial 30.53%.

What is the fastest-growing suburb in Melbourne?

Cranbourne East is the fastest-growing suburb. The area sees a rise in population at a rate of 88 people per week.

Are property prices going down in Melbourne?

Property prices are increasing in Melbourne. Units have shown an increase of 9.2% while houses prices have risen 19.5% over the 12 month period.

Are houses in Melbourne expensive?

Melbourne is the second most expensive Australian city for anyone trying to own property. It is second only to Sydney. However, it’s still possible to find some suburbs with a median house price well below the $1 million mark. They may just have less infrastructure and be situated further out from the CBD.

Making the most of the property trends

Using these impartial statistics can give you a lot of insight into the Melbourne property market. This may be an opportune time to invest if you consider the stats. However, keeping abreast of relevant statistics forms part of a full-fledged strategy.