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Investment potential waiting to be unlocked in Melbourne
While the Melbourne market appears ripe for investors following years of underperformance, buyers have been warned to ensure they are choosing the right location for their portfolio plans.
Investors need to target the right suburbs to position themselves well ahead of a Melbourne property resurgence, according to an experienced buyer’s advocate.
Seed Property lead buyer’s advocate Albert Hadinata said that after years of underperforming, Melbourne was now rife with opportunity for investors.
He said the combination of affordability and strong fundamentals had created a serious buzz about the Victorian capital.
“With all of the changes coming into play, affordability is key in 2026,” Hadinata said.
“A lot of first home buyers are still buying in Melbourne, especially in the metro market.”
He said that homes priced up to around $900,000 were still “going gangbusters” for all buyers, ranging from owner-occupiers to investors.
Similarly, he said the unit market in Melbourne was in the midst of a recovery, particularly at the lower price points.
Finding the right location for your strategy
Hadinata said while investors’ strategies were diverse, targeting the right areas would be key.
For buy-and-hold to be effective, Hadinata said investors should target properties within the Melbourne metropolitan area.
“But if you would like to actually manufacture growth or do some developments, the eastern side of Melbourne is really good,” he said.
He said subdividing the land and building a townhouse on a property had become a strong method of wealth creation in Melbourne.
Hadinata referred to a retain-and-build strategy, in which a dwelling was added while the existing building was left unchanged.
“We love a retain-and-build because that is where the margin is. We don’t like to do a knockdown and build because building two is more expensive.”
“If you can keep the front one, get it rented out and build a secondary townhouse at the back, that creates a higher margin for the whole asset.”
Additionally, he said that if yield were the sole focus, investors should consider properties outside the Victorian capital.
Opportunity not broad-based
While some pockets of Melbourne were primed for investors, Hadinata said there were regions they should steer clear of.
According to Hadinata, purchasing in regions with the potential for a supply surge and investor-led demand driven by affordability could stifle portfolio growth.
“It’s going to create supply, so that is a risk that I don’t want to take for my clients or even for myself.”
Hadinata said the high level of supply seen across Melbourne’s western suburbs, particularly in suburbs such as Melton and Werribee, should be enough to ensure investors think twice before jumping in.
“Yes, it is more affordable, but with a lot of land supply, so I wouldn’t expect growth within the short to medium term.”
Going against the grain
Hadinata said that while investors typically restricted themselves to the established housing market, there was a case to be made for new builds.
“There is always a spot in an investment portfolio for new builds, according to circumstances.”
He said it was important to remember that not all builds were equal, and that the asset’s position could play a significant role in its long-term performance.
According to Hadinata, it wasn’t about buying new builds for the tax benefits, but rather about capitalising on the region’s future demand.
“You can see the transactions in terms of demand for the land that would create the supply shortage eventually.”
Additionally, Hadinata said the most important aspect of his personal investing strategy was to purchase where owner-occupiers wanted to live, regardless of whether it was an established or new-build home.
He said that understanding the demand from owner-occupiers would give investors an idea of which areas were likely to be the next hidden gem.
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