Identifying Melbourne’s Undervalued Suburbs

Numerous investors scrutinize charts and data detailing the top-performing suburbs, often those with high median prices, and find themselves astonished by the potential assets they could have acquired—the allure of identifying the next lucrative investment hotspot.

At Wise Real Estate Advice, we analyze market opportunities throughout Melbourne, pinpoint undervalued suburbs for our clients, and assist them in constructing a robust investment portfolio.

For instance, Wyndham Value in the Western Suburbs Of Melbroune is widely regarded as being a poor place to own an investment property due to the long term lack of capital growth.

In 2017 Wyndham Vale median house price experienced a 20% growth. 

We look at how our buyers agent spot great value suburbs and our top 10 value suburbs of 2024. 

Identify Undervalued Suburbs

Identifying Melbournes Undervalued Suburbs

1. Consider taking your search to the outer suburbs.

One significant benefit of exploring areas beyond your immediate locality is that it compels you to approach decisions with a practical mindset.

Concentrating on statistics and growth drivers rather than trivial emotional factors, such as personal preferences about inter design or a floor plan. 

Emerging areas continue to offer attractive rental yields compared to the initial investment. While capital growth may be slower, the median house price can be up to 50% lower in an outer suburb. 

Do not worry, coffee shops were once exclusive to inner suburbs, but now they can be found everywhere.

2. Examine supply and demand.

In areas with a surplus of properties on the market, prices tend to be more affordable, while a scarcity of available properties typically results in higher prices. 

Conventionally, the Melbourne property market should have witnessed declines in prices during the COVID-19 lockdowns of 2021/2022 and the interest rate hikes of 2023.

However, individuals opted to retain their properties, resulting in a shortage of new listings on the market and driving up property prices across metropolitan Melbourne.

Additional indicators of supply and demand include the often inverse relationship between low auction clearance rates and demand for properties in certain suburbs, presenting a favorable opportunity for negotiation.

Our buyer’s agents closely monitor listings that have had unsuccessful auctions and spent time on market, as these sellers are generally open to negotiation.

3. Target suburbs with anticipated infrastructure

Enhancements in infrastructure, such as the introduction or improvement of bus and rail links, as well as road developments, can significantly enhance the value of a suburb.

When the government outlines plans for such advancements, it serves as a strong indicator of their anticipation for growth in the area.

For instance, when the West Gate Tunnel was approved the suburbs that would benefit the most (Yarraville, Seddon, Footscray) experienced an increase in capital growth 3% higher than they had in previous years. 

Consequently, this becomes a clear signal that property prices are likely to rise in response to increased demand.

Other things to look out for are new schools, medical facilities and shopping centers. All this information on proposed developments is available online via council or government website. 

4. Target suburbs next to the fastest growing suburbs.  

Each financial quarter, the REIV releases data on the top 20 fastest-growing suburbs in Melbourne. Essentially, this chart illustrates suburbs where buyers exhibit the highest levels of aggressiveness at auctions, often resulting in significant overbidding on prices.

Clever buyers will avoid the intensity of competitive property auctions and instead focus on homes a few suburbs away that are poised for the next upswing in price. 

5. Hire a buyer’s agent. 

Buyers agents operate in the property market day in and day out, making them Melbourne’s premier sources for identifying areas where property prices are either booming or creating buying opportunities. 

Our pick of undervalued Melbourne suburbs for 2024.

1 St Albans.

2. Croydon.

3. Werribee.

4. Altona Meadows.

5. Moorabbin.

6. Point Cook.

7 . Frankston.

8. Travancore.

9. Seabrook.

10. Thomastown.

At Wise Real Estate Advice, our Melbourne based buyers agent we ensure all boxes are ticked and that sincere care is taken when providing a buyer with the wise advice and action required throughout the buying process. To speak to one of our friendly buyer’s agents click here to fill out an enquiry form or just simply call us on 1300 00 WISE.

By Mark Ribarsky