Investor Yields Returns and What the Numbers Show

Melbourne's property investors are seeing yields of around 3-4% in some areas, with the median house price sitting at approximately $920,000 and units at $620,000.

This matters now because the current market conditions, with a plunge in auction clearance rates and a decrease in property prices, are making investors rethink their strategies. The demand for properties in Melbourne is still driven by migration, with areas like Bayside and Inner East commanding a premium. However, the Frankston corridor is also experiencing growth, making it an attractive option for investors.

In areas like St Kilda, where the median house price is around $1.4 million, and Prahran, with a median unit price of $540,000, investors are looking for ways to maximise their returns. Organisations like the Real Estate Institute of Victoria (REIV) and the Melbourne Property Buyers Agents Association are providing guidance to investors on how to navigate the current market. For example, properties on streets like Fitzroy's Brunswick Street and Carlton's Lygon Street are in high demand due to their proximity to amenities and public transport.

Local Market Trends

According to data from the REIV, the average rental yield for houses in Melbourne is around 2.9%, while units are yielding around 4.1%. In specific areas, like the suburb of Highton, where a family home with a basketball court was recently listed for circa $2 million, investors can expect yields of around 3-4%. The numbers also show that properties in areas with high demand, like the Melbourne CBD, are experiencing lower yields, around 2-3%, due to higher property prices. For instance, as of June 2026, the median house price in the Melbourne CBD is around $1.1 million, with an average rental yield of 2.5%.

So, what happens next for investors in Melbourne's property market? With the current market conditions, it's essential for investors to do their research and seek advice from professionals. They should look for areas with high demand and relatively affordable prices, like the Frankston corridor, and consider factors like proximity to public transport, amenities, and schools. By understanding the local market trends and being strategic in their investment choices, investors can still achieve good returns in Melbourne's property market. The REIV and other organisations are providing valuable resources and guidance to help investors make informed decisions and navigate the current market.