South Melbourne VIC Property Investment
Port Phillip · 3205 · Score: 67/100 · Buy
South Melbourne Short-Term Rental (Airbnb) Market
South Melbourne VIC Investment Brief
BUY — 2.5% gross yield on a $1,736,032 (single source — OnTheHouse only, no peer to validate) median.
THE MARKET
South Melbourne has compounded at 3.5%/yr over 5 years. Median sits in the $1,736,032 (single source — OnTheHouse only, no peer to validate) band today. Properties are sitting on market for 26 days (sellers have the leverage).
- Median house: $1,736,032 (single source — OnTheHouse only, no peer to validate) | Units: $635,102
- Gross yield: 2.5% | Net yield: 1.0%
- 5yr price CAGR: 3.5%/yr | 3yr forecast: 1.0%/yr
- Population: 11,548 | Owner-occupier rate: 42% | Affluence: Very High
- Supply pipeline: Moderate — Development activity consistent with long-term averages
RENTAL SNAPSHOT
- Vacancy: 2.0% (stable) | Rental demand: High
- Median weekly rent: $825/wk | Days on market: 26 (stable)
- Balanced market — vacancy manageable but monitor trend.
SHORT-TERM RENTAL
- Median nightly rate: $525/night | Occupancy: 48%
- Estimated annual STR gross: ~$92,047/yr
- vs long-term rent: $42,900/yr (+115% STR premium — factor in higher management costs)
INFRASTRUCTURE & CATALYSTS
- Metro Tunnel (Melbourne) (Under Construction)
- West Gate Tunnel (Melbourne) (Under Construction)
- North East Link (Melbourne) (Under Construction)
- Suburban Rail Loop East (Melbourne) (Under Construction)
- Transport: Well-connected inner-city location
BULL CASE
If South Melbourne maintains 3%+ annual growth and vacancy stays below 1.4%, median prices could reach $1,996,437 within 3 years with yields compressing slightly as capital values rise.
BEAR CASE
A market correction or interest rate shock could see prices in South Melbourne pull back 10-15% from $1,736,032, with vacancy rising to 3.6% and rental yields softening as tenants gain leverage.
KEY RISKS
- No significant risk factors identified for this suburb
COMPARABLE MARKETS
- Altona East (VIC): $1,250,000 median, 1.7% yield, 0.0% 1yr growth
- Carlton (VIC): $1,400,000 median, 3.1% yield, 8.7% 1yr growth
- Collingwood (VIC): $1,300,000 median, 3.2% yield, 4.1% 1yr growth
THE PLAY
South Melbourne presents a compelling investment opportunity. The combination of solid fundamentals and high rental demand supports entry at current price levels. Proceed with due diligence on specific properties. Target gross yields above 2.5% and prioritise properties with value-add potential. Consider timing entry around the current above_trend phase of the market cycle.
- Entry range: $1,562,429 – $1,909,635
- Minimum gross yield to target: 4.5%
- Watch signal: vacancy dropping below 2% and days on market holding under 35
This analysis is for informational purposes only and does not constitute financial, legal, or investment advice. Seek professional advice before making investment decisions.
Gentrification Index
Growth Forecast
high confidenceBasis: 5yr CAGR 3.5% + 10yr CAGR 3.0%
- +Low rental vacancy (2.0%) — constrained supply
- +Active market (26 days avg)
- +Premium transport infrastructure — supports long-term capital growth
- −High supply pipeline (6392 new approvals) — may cap price growth
Suburb Metric Thresholds
Macro Environment
Macro Indicators
Cash Rate
4.35%
▲ 0.25%Cash rate as at 2026-05-06 · Credit data 2026-04
Suburb Supply & Demand
Suburb Supply Pipeline — New Dwelling Approvals
1,170
2020
1,198
2021
853
2022
1,151
2023
2,020
2025
New dwelling approvals — higher numbers mean more future supply
Socio-Economic Profile
Source: ABS Census 2021SEIFA Index · Postcode 3205
Decile 7 of 10 — Average
Population
11,548
Education (IEO)
10/10
Econ. Resources (IER)
2/10
10-Year Investment Projection
Modelled on South Melbourne VIC data — rent, capital growth, tax, and depreciation over 10 years.
Pre-filled: $825/wk median rent for South Melbourne. Capital growth and rent increase are editable assumptions.
Schools
In your catchment
These are the government-school zones containing this suburb centroid. Specific addresses within the suburb may fall in different catchments — confirm with the school directly.
Nearby Suburbs
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Analyse a Property →Data sourced from ABS, state government property sales, and Airbnb market analytics. For informational purposes only — not financial advice.