Should you invest in a townhouse, an apartment, or a house?
Each option presents unique advantages and challenges. Choosing the right type of housing in Melbourne — depends on various factors, including your lifestyle preferences, budget, and future plans. Here’s a breakdown of each option to help you make an informed decision.
Key Differences
| Type | Townhouses | Apartments | Houses |
| Who It’s For | Ideal for families and young professionals seeking a balance between space and affordability. | Best for investors targeting short-term rentals or buyers looking for urban living. | Perfect for families and retirees looking for space, privacy, and long-term growth. |
| Advantages | - Lower maintenance than houses - More privacy than apartments - Often located in suburban areas close to schools and parks. | - Affordable entry prices - Low maintenance - Strong demand in inner-city areas like Melbourne’s CBD and Docklands. | - Higher capital appreciation - Larger land sizes - More control over renovations. |
| Considerations | - Strata fees may apply - Less capital growth compared to houses in prime locations. | - Lower capital growth - Potential oversupply in some areas. | - Higher maintenance costs - Higher entry prices. |
Current Property Prices in Melbourne
| Property Type | Median Price | Rental Yield | Capital Growth Potential | Notes |
| Houses | AU$930,000 | ~3% | High (3% to 5%) | Down 3% in 2024; some suburbs like Footscray at AU$610,000. |
| Apartments | AU$600,000 | ~4.0% | Low to Neutral (-2% to 0%) | One-bedroom median price at AU$370,000; three-bedroom at AU$1,058,000. |
| Townhouses | AU$800,000* | ~3.5% | Moderate (2% to 4%) | Prices vary by location; median dwelling value down 6.5% from peak. |
*Note: The median townhouse price is estimated based on current trends and may vary slightly.
Suburb-Specific Median House Prices
| Suburb | Median House Price (AUD) (SGD) |
| Braybrook | AU$670,000 (S$567,579) |
| Brooklyn | AU$680,000 (S$575,364) |
| Maidstone | AU$705,250 (S$597,167) |
| Footscray | AU$610,000 (S$517,063) |
| West Footscray | AU$700,000 (S$593,810) |
| Altona North | AU$860,500 (S$729,665) |
| Coburg North | AU$868,000 (S$734,171) |
| South Kingsville | AU$826,700 (S$700,958) |
| Kensington | AU$866,250 (S$733,143) |
Factors Affecting Prices
- Interest rates continue to impact buyer capacity.
- Population growth is influenced by overseas arrivals normalizing since early 2023.
- High-net-worth individuals often hold properties in ultra-high-end suburbs.
Capital Growth Potential in Melbourne
Market Recovery Anticipation
After experiencing price declines in 2024, Melbourne's property market is poised for a rebound. A capital growth of approximately 3% to 5% for houses and 4.6% for units (apartments and townhouses) is projected in 2025.
This rebound is anticipated as the market enters a "catch-up growth phase," driven by strong underlying fundamentals such as population growth and urban renewal projects.
Supply Constraints
The current undersupply of housing is a critical factor supporting future price increases. With construction rates projected to fall below the demand for new homes, upward pressure on prices is expected to persist. The anticipated cuts in interest rates later in the year are likely to further stimulate demand, making this an ideal time for investors to secure properties before prices rise.
Strong Population Growth
Melbourne's population growth, bolstered by both domestic and international migration, positions the city as a desirable location for families and professionals. This demographic trend fuels demand for housing, particularly in established suburbs that offer amenities and infrastructure.
Investment Hotspots
Areas such as the City of Casey and other metro regions are highlighted as prime investment locations due to their affordability compared to Sydney and ongoing urban development initiatives. These hotspots are expected to attract first-home buyers and investors alike, further driving up property values.
Why Buy Now?
Lower Entry Prices: With current market conditions reflecting a decline in prices, buyers have an opportunity to enter the market at more favorable rates. Waiting for prices to rise could mean competing with owner-occupiers who are eager to secure properties once interest rates drop.
Long-Term Growth Outlook: Historically, Melbourne has demonstrated resilience and strong capital growth over time. The current flat patch is seen as temporary, with significant growth expected as economic conditions improve and investor sentiment strengthens.
Rental Demand: With vacancy rates at historic lows, rental prices are on the rise, making investment properties more attractive for generating income. This trend suggests that even if short-term capital growth is subdued, long-term rental yields will remain strong.
Making the Right Choice
When deciding between townhouses, apartments, or houses in Melbourne, consider your personal circumstances.
By answering these questions, you'll better understand which property type aligns with your lifestyle and investment goals.
Seize the Opportunity Now!
Now is the perfect time to invest in Melbourne's property market! With prices still relatively low, savvy investors have a unique opportunity to capitalize on emerging growth trends. The city is experiencing robust population growth and supply constraints, setting the stage for a strong economic recovery.
By entering the market during this pivotal transitional phase, you position yourself to reap significant returns in the coming years. Don’t wait—contact us now!