areas to buy in melbourne

Hi Dellas

Knowing for certain where the next hotspot is, is a bit like knowing the tattslotto numbers that will come up this Saturday.  Best to make an educated decision based on known facts.

Firstly, look at the rear pages of the Australian Property Investor magazine and take a look at which suburbs offer property you can afford (the median price should give you a guide… then you can look on http://www.realestate.com.au/buy to see what properties are on offer in the area… then you'll see more clearly what you can afford).

You will also want to see low vacancy rates (below 3%) and satisfactory rental yield (each person will have a different strategy – I personally don't want to touch anything with a yield below 5% because I'd have to top up the mortgage too much out of my own pocket).

Personally I also look at suburbs that have proven that they provide solid capital growth.  In other words, you want to see goodness in the average annual capital growth over 10 years column.  7.2% is bang on what it needs to be for a property to have doubled in value over a decade. 

Plenty of properties out there that boast 10% average annual capital growth, 6% rental yield, and below 2% vacancy rates.  Now that's my definition of goodness.  As far as I'm concerned, that is the trifecta.

If there is known to be some infrastructure coming to town (a new train line or station, a new major road, a new shopping centre), then the suburb will be easier to live in, and easier to commute to employment. So generally, people start moving into the suburb, which drives up demand, which assuming supply is a bit behind, drives up prices.  You can find out about forthcoming infrastructure by reading the property investment magazines, and honestly, by simply ringing the council and asking what's in the pipeline. 

If you stick to the above rules, you'd surely be fine. 

Hope this helps.