Finding Value in Victoria: Investment Locations You Can Buy for $650,000 or Less

I am often asked this question by prospective purchasers. For whatever reason, $650,000 seems to be a popular first-time investor budget. Even for those who could borrow a higher amount, a more cautious approach is often pursued.

Many assume that a house in the fringe locations of our capital city is the best approach.

There are house options still remaining in this price range in locations such as Werribee, Melton, Craigieburn, Pakenham and Sunbury. Some examples are pictured below.

However, it’s important to note where $650,000 sits in relation to the median house price values for the suburb. It is also imperative to understand what is driving the market.

If investors are driving the market, caution does need to be applied. Are you targeting the cheapest section of a fringe market? Or are you familiar enough with a suburb and it’s various pockets to make a good purchase decision?

The risks with any fringe areas can be numerous.

Accessibility and amenity. Is the transit to employment, schools, city, airports etc an easy transit?

New house and land posing a threat. Is there an abundance of new land releases close by that could threaten the desirability of the asset?

Affordability vs aspiration. Are owner-occupiers buying here because they aspire to live here? Or are they buying here because it’s all that they can afford?

Owner/Renter ratio. What is the proportion of rented properties to owner-occupied properties?

Vacancy rates. While we have a housing shortage in Victoria, how does the target area compare?

Crime rates. How does the crime rate compare to other areas?

The good pockets vs the bad. Like any area, suburbs have different character traits across the various streets. Investors should know how the locals feel about the location within the suburb that they are targeting.

Houses in the fringe areas of major capital cities aren’t guaranteed to outperform. Considering alternatives and noting historical capital growth, vacancy rates, rental yields and tenure of tenancies is important before making a purchase decision.

We have assisted clients with purchases in blue chip areas for budgets at this level. Considering the regions is one viable alternative. These two, recently sold properties below are located in Ballarat East and Geelong West respectively. The Geelong property is a two bedroom villa unit within less than one minute’s walk to popular Pakington Street’s shops and cafes. Geelong train station is a fifteen minute, and the CBD and waterfront are within walking distance also. The Ballarat property is a pretty, period cottage on 320sqm of land, with dual street frontage.

Another alternative is to consider well-located, boutique apartments. Many would argue that apartments in Melbourne have underperformed over the past decade, and they would be correct. However, we have seen a strong uptake from first homebuyers in the boutique apartment segment of the market. This blog circled in on this genre of apartments to illustrate the change in growth rates over the years.

When starting on a property investment journey, it’s vital to understand the risks, ask the right questions, and pave out a strategy that will be rewarding. Knowing the markets is critical, particularly when it comes to pinpointing the growth drivers, and determining if these growth drivers will be sustained long term.