Top Yielding Inner Melbourne Suburbs
Apr 7, 2016 - By Nicholas Scott Property Investments

Many Melbourne tenants are paying record-high rents and many renters looking to move to inner city neighbourhoods are  finding it difficult to find a home.

Despite record-high rents, however, in some Melbourne inner city neighbourhoods rent is getting cheaper. In others, rent has barely moved, which means some pockets of the inner city are better for tenants and others are better for investors.

In Brunswick, rent has fallen on one bedroom units from a median weekly rent of $330 to $300. In Carlton North and Kensington, the median price of a two bedroom unit has fallen by roughly $50 per week to $400 and $350 respectively. East Melbourne has also seen a decrease in median weekly rent from $495 to $450.

These price drops have some investors offering incentives to ensure occupancies. With falling rent prices in some inner city neighbourhoods and high yields in others, what inner city suburbs should investors invest in? Let’s look at the pockets that look promising for investors in 2016.

We’ve discussed the top five suburbs in Melbourne, as a whole, for investors, but let’s have a look at the top yielding inner city suburbs.

In this instance, we’re classifying inner city suburbs as those within 10 kilometers from the CBD. We’re also only going to look at top yields and growth for units.

In 2015, Caulfield South saw 19.0% 1-year capital growth and a 4.0% rental yield. The average rent was $380 per week.

Fitzroy North, an eclectic neighborhood with a hipster feel, saw 1-year capital growth of 17.2% and a yield of 4.1%. The average rent was $400 per week.

St Kilda East, an inner city by the sea where vibrant nightlife and farmer’s markets abound, saw 1-year growth of 15.3% and a 4.1% yield. The average rent was $365 per week.

In Thornbury, where there’s a mix of old and new, bike paths for the outdoor lovers, cafes, and great transportation, 1-year growth came in at 11.0% and yield was 4.5%. The average rent was $320 per week.

Malvern East is an inner city suburb experiencing high market demand. It had 1-year growth of 7.6% and a rental yield of 3.4% with the median average rent for a unit being $380 per week.

Despite drops in rent in certain areas, the inner city has areas where investors can achieve a decent yield and capital growth.

What do you think? As an investor, would you invest in any of these inner city neighbourhoods?

If you have questions about purchasing an investment property or would like to speak to a qualified real estate professional, contact us.

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