Hi,

The Melbourne auction clearance rate slightly dipped on over the weekend to 69% on 867 auctions reported to Domain.  456 sold at auction, 142 passed in and 67 were withdrawn.  As a comparison, the clearance rate for the same weekend, last year was 62%.

Over the past two years many property investors sold their investment properties due to rising holding costs.  Now it appears the table is turning, interest rates are coming down, vacancy rates are still low and rents are continuing to rise.  The latest data from SQM research shows that rents in Melbourne rose 3% over the past twelve months… (2.3% for houses and 3.4% for units) and vacancy rates are stable at 1.7% in May 2025.

Many investors, in particular interstate buyers, are circling the Melbourne and are also looking at the Geelong property market as good options to buy.  Melbourne has been sluggish in property price performance for a number of years and has become one of the most affordable capital cities in the country.  That being said, it is still very difficult to buy a quality house (in established locations with good demographics) in rental condition under $1m (where it seems many investors are capped out in budget).  Some investors are looking at other areas around Melbourne where it is still possible to buy a house but within a sub $1m budget.

Most property investors buy for capital growth and some for yield.  Those looking for capital growth are hoping to purchase a property with land are having to look at alternative areas to Melbourne.  Geelong (which is an easy commute to Melbourne) being one of those areas and for good reason.  Population is predicted to increase by almost 50% over the next 20 years which will put huge pressure on housing supply for both home owners and renters.  Due to the strong population growth and expansion of infrastructure and project approvals (another recently approved project is the $250M Viva energy gas terminal at Corio Bay) the city just keeps growing.

Some investors are looking at buying higher yield properties where CBD apartments are a higher-risk option (as rents have risen but prices have not) and other investors are looking at smaller properties such as villa units and apartments in the inner and middle ring suburbs to get into the Melbourne market.   Many investors with budgets in excess of $1m are able to buy a house in the inner and middle ring of Melbourne and are trying to buy in before more interest rate cuts will likely push prices upwards.

We have also seen some investors moving to commercial properties where some properties have been achieving solid capital growth and slightly high rental yields.  Also, there are benefits with commercial properties where the tenant pays for most of the outgoings and therefore reducing the ongoing holding costs.

There are many options when it comes to buying an investment property, and every buyer’s financial situation and goals are different so it is important to ensure you get the right advice (an experienced buyers’ agent or property advisor) to ensure you find the property that is the right fit.

Have a great week.

Kim Easterbrook – Managing Director