This Is Why You Should Not Invest In Melton South!

Recently I have decided too look where no other investor is looking at to find out whether or not Melbourne could be the next best place to invest. But once suburb where you should definitely not invest in is Melton South. Supply is the enemy of Capital Growth!

Suburb Details:

Melton south has a number of properties under $450,000 and you as an investor may be tempted into purchasing a property here. Now, if you want to live there as an owner occupier I think now would be the perfect time to jump into the market however as an investor, purchasing in Melton south would be a terrible decision. On a high level view Melton south may seem like an ideal place to invest your money as it is at the bottom of its property cycle however its future capital growth will remain stagnant for the foreseeable future. Melton South’s short term or long term data do not indicate capital growth in its future and I believe investors should be very careful apart placing their money here.

Buyers have made money in the past in Melton South before but that was during the COVID boom. Investors took advantage of cheap land and house packages however since then (2022) growth has stagnated and even fell in recent months, and there are several reasons for that which I will break down below.

Key Data Metrics

Location & Infrastructure

Melton South, a suburb located approximately 35 kilometres west of Melbourne’s CBD, is a growing area known for its developing infrastructure. It is part of the City of Melton, a council that has seen significant population growth in recent years. Melton South is well-connected by public transport, with the Melton railway station providing regular V/Line train services to Melbourne and Ballarat. The suburb also has access to major road networks, including the Western Freeway, facilitating convenient travel to and from the city. The area has a range of amenities, including schools, shopping centres, parks, and recreational facilities, making it an attractive location for families and individuals seeking a balanced lifestyle with easy access to urban conveniences. Recent infrastructure developments have focused on improving road conditions, expanding public transport options, and enhancing community services.

Other Important Factors:

The suburb has an incredibly large amount of supply coming into the market with developers selling home and land packages in the area. This influx of houses will cause an oversupply in the market. The suburb already has a large oversupply meaning that supply outweighs demand. This causes house prices to stagnate and possibly fall.

The short term data suggests that Melton South has no real housing demand. Stock on market, Days on market, vendor discounting values are all in the range indicating that the market is cool and there is no pressure. This is good news for owner occupiers as they have an abundant amount of choices to choose from, but without this pressure there will be no capital growth.

Rental yields are extremely poor in Melton south sitting under <4.5%. In a high interest rate environment you will be forking out $500-1000 every month to hold a property where its value will not grow for the future. There is also no indication that the rent prices will grow as there is no housing pressure in that suburb. Also vacancy rates are high at 2.24% while nationally we are sitting a 1%.

Nearby Major Projects:

• Melton South Major Projects - Link

• Incoming Supply Of Houses - Link

Example Property:

_{*Note: These calculations are purely estimations, but overall numbers will vary depending on your deposit, interest rates and other factors.}

Pro’s Of Investing In Vincent

• Numerous opportunities to purchase under market value properties for under $450,000.

Con’s Of Investing In Vincent

• Poor rental yields - Below 4.5%

• Large incoming supply from developers selling home and land packages.

• Not enough income demand to curb supply causing prices to stagnate.

• High days on market, stock on market, average vendor discounting.

• No indicators of future capital growth for the next 1-2 years.

• Melbourne’s land tax & covid-19 debt levy (tax-deductible).

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_{Disclaimer: The information provided in this article is for educational and informational purposes only. It is not intended as financial, legal, or professional advice. Always do your own research and consult with a qualified professional before making any decisions. The opinions expressed here are solely those of the speaker and do not reflect the opinions or views of any other organization. By using this information, you agree that the creator of this content is not responsible for any financial or other losses you might incur.}