Inner City Property Investment: Trends, Yields & Market Insights
As the property market continues to evolve, Melbourne's inner-city suburbs remain a key focus for investors looking for strong rental yields and long-term opportunities. While many investors are holding off due to market uncertainty, some are taking advantage of the wide range of properties available in the CBD, where rental returns remain solid.
Rents Stabilise, Yields Remain Strong
Recent sales highlight the investment potential of inner-city properties. A one-bedroom apartment in an established building recently sold for $295,000, offering an impressive 8 percent yield, with a weekly rent of $500. Consistent rental yields have been observed in Docklands and Yarra’s Edge, where lifestyle appeal and long-term investment prospects continue to attract buyers.
The investment market has faced challenges due to various factors, including an increase in available stock as landlords sell their units. Some renters are also transitioning to homeownership, taking advantage of more affordable apartment prices. According to realestate.com.au data, units in Docklands and Southbank are achieving weekly rents of $650, with yields of 6.1 percent and 6 percent, respectively.
Policy Changes Needed to Lift the Rental Market
Despite strong yields, the inner city rental market is facing headwinds, including the slow return of international students and a lag in workers moving back to the city. To revitalise the CBD rental market, policies that encourage international student arrivals and entice more professionals to live and work in the city are essential.
Landlords are also adapting to these market conditions, with a greater focus on competitive pricing and tenant needs. Securing quality tenants is possible for those who price their properties in line with market expectations.
Our Docklands and Yarra’s Edge teams continue to deliver strong results for landlords through open inspections six days a week, clear communication, and a track record of matching quality tenants with well-presented properties. While the market has seen rental declines of 7-9 percent over the past year, tenants are still seeking properties that offer superior amenities, views, and value.
For example, a local renter recently leased a fully furnished two-bedroom apartment in Docklands for $1,050 per week, choosing the premium views from the 30th floor as a key factor in their decision.
The inner-city property market remains a dynamic space, with strong rental yields, evolving tenant preferences, and policy shifts shaping investment opportunities. Staying informed and working with experienced property professionals is key to navigating this ever-changing landscape.