With an estimated population of 5.078 million (2019), Melbourne ranks as the second-most populous city in Australia, second only to Sydney, which has 5.312 million people in 2019.
Melbourne has established a strong reputation as a centre for business and finance, culture and arts as well as sports.
Data from the Australian Bureau of Statistics (ABS) showed that 3 out of the 10 regions across Australia that attracted the highest number of overseas migrants in 2019 were in Melbourne.
Combined, the areas of Inner Melbourne, South East and West Melbourne attracted a total of 47,856 overseas arrivals. On the other hand, Sydney’s top 3 areas – Inner South West, Parramatta and City and Inner South – gained 35,887 international migrants.
While the pandemic and the series of lockdowns spawned some interstate migration from Melbourne to other capital cities, there’s no doubt that Melbourne has enjoyed strong support for international arrivals in previous years.
Returning migrants to boost demand for accommodation
As Australia opens its borders to overseas travellers and new migrants, it will be interesting to see if Melbourne will have the same level of attraction (or better) compared to other cities.
Sam Assaad, investment specialist at Wealthi said, Melbourne is seeing a recovery of net migrants that had escaped Melbourne's lockdown during COVID-19 pandemic. Clients that sought the sunshine state (Queensland) are returning back home as life resumes back to normal.
“Demand for homes have increased, as well as units are being filled up by foreign students, skilled work visa holders as our borders have opened and confidence in the city has come back.” Sam Assaad
He added that “Land component options in Melbourne are still wise and viable options predominantly in the west, where land and house packages are prime for investors.”
In this article, we’ll focus on the top 3 Melbourne growth areas. We’ll examine the growth drivers and how will they impact property investments in those regions.
Melbourne – Inner
The Inner Melbourne region comprises the municipalities of Melbourne, Yarra, Port Phillip, Stonnington (west of Kooyong Road) and Docklands. It is the most diverse region within metropolitan Melbourne, in terms of its demographic composition and mix of dwelling types.
Recognised as the primary business, retail, sport and entertainment region for Victoria and metropolitan Melbourne, this area is home to major regional facilities and infrastructure, such as the CBD, the Port of Melbourne, hospitals, research centres and tertiary institutions. It also operates as a major regional transport hub.
According to the Inner Melbourne Action Plan, which outlines the planned development and infrastructure build for the area, this region is estimated to have a population of 405,000 by 2031.
In terms of accommodation and housing preferences, the Inner Melbourne Region is a popular choice for people who choose to live, work and study within the region. And this contributes to its economic strength and diversity.
The Inner Melbourne Region’s resident population is made up of a broad range of ethnic backgrounds, socio-economic groups and different household types.
A densely populated by Australian standards, the Inner Melbourne region is a high employment ‘activity centre’ that attracts highly skilled workers, tourism and investment.
Melbourne – South East
The ten districts in South Eastern suburbs of Melbourne include Bayside, Cardinia, Casey, Greater Dandenong, Frankston, Glen Eira, Kingston, Monash, Mornington Peninsula and Stonnington.
The Victorian government’s suburban profile describes this area as a high density residential and retail precinct. The Inner South-east Metro Region is a desirable residential location with strong retail employment.
Job opportunities attract people to Southeast Melbourne
Southeast Melbourne is recognised as one of the fastest-growing regions in Australia’s fastest-growing city and is one of the country’s most important economic centres.
The Greater South East Melbourne region has more than 1.5 million residents. This region is home to two National Employment and Innovation Clusters, one at Monash (75,000 jobs) and the other at Dandenong (55,000 jobs).
According to Victorian government data, more than 470,000 are employed in the region but more than 232,000 workers commute to jobs opportunities outside south-east Melbourne.
Melbourne – West
The Western suburbs of Melbourne include the areas of Airport West, Caroline Springs, Essendon, Flemington, Footscray, Keilor, Melton, Point Cook, Sunshine, Sydenham, Werribee, Williamstown and Yarraville.
According to the Victorian government data, The Western Region has a population of approximately 879,000 people (approximately 19 per cent of metropolitan Melbourne’s total). Its population is expected to continue to grow rapidly at approximately 12 per cent compared to 10 per cent across all metropolitan regions.
What will drive growth in these top 3 areas?
We’ve always highlighted population as one of the key drivers in investment property prices. And with international migrants and domestic interstate people moving back to Melbourne, these growth areas stand to benefit from a rising population.
The Inner Melbourne area in particular, with its business, sports and cultural hub attraction, remains a strong magnet for many people.
Employment opportunities – either in a particular region or nearby surrounds also play a critical role in the rising demand for accommodation. More and better employment opportunities can create a comfortable financial situation which can ultimately translate to better rental income for property investors.
As a property investor, buying into these areas will give you a solid foundation to build or boost your portfolio.
If you would like to discuss the Australian property market in more detail, please reach out to the team to organise a time to have a conversation about how Wealthi can help you build a successful property portfolio.