Tullamarine VIC Property Investment

## 1. Investment Verdict We recommend a "Hold" strategy for Tullamarine, VIC, with the single most important number justifying this decision being the Investment Scorecard rating of 59.0/100. This score indicates a stable market with potential for moderate growth, but not enough to warrant a "Buy" recommendation at this time.

## 2. Market Overview The median house price in Tullamarine is $840,000, while the median unit price is $610,000. Over the past year, house prices have grown by 4.9%, with a 5-year compound annual growth rate (CAGR) of 5.5%. The market cycle is currently stable, with a high owner-occupier rate of 71%. This suggests that the suburb is in demand, but the growth rate is not exceptionally high. For buyers, this means that prices are relatively stable, but there may not be significant room for negotiation. For sellers, the stable market and high demand mean that they can expect to sell their properties relatively quickly, but may not see significant capital gains in the short term.

## 3. Rental Market The vacancy rate in Tullamarine is 2.2%, indicating a tight rental market with high demand. The median weekly rent is $580, resulting in a gross rental yield of 3.6%. With a rental demand rating of "high", investors can expect to find tenants relatively easily. However, the yield is relatively low compared to other suburbs, which may impact cash flow. For example, comparable suburbs like St Albans and Noble Park have similar yields of 3.5%, while Deer Park has a slightly higher yield of 3.6%.

## 4. Short-Term Rental Opportunity The median nightly rate for short-term rentals in Tullamarine is $431, with an occupancy rate of 48%. This translates to an estimated annual revenue of around $94,000 (assuming 365 days of occupancy at $431 per night, multiplied by the occupancy rate). However, considering the relatively low occupancy rate, long-term rentals may be a more stable and predictable option for investors. The nightly rate is also relatively high compared to other suburbs, which may make it attractive to short-term rental operators.

## 5. Infrastructure & Growth Drivers Tullamarine is well-connected to the city, with announced projects like the Melbourne Airport Rail (SRL Airport) and the West Gate Tunnel (Melbourne) under construction. The suburb's proximity to Melbourne Airport and its existing transport links make it an attractive location for residents and businesses. The limited development pipeline, with supply growth outpacing new supply, is also expected to drive price growth. The population of 6,733 and unemployment rate of 6.2% suggest a relatively stable economic base.

## 6. Bull Case If market conditions hold or improve, Tullamarine's 3-year growth forecast of 13.5% could be achievable. With a stable market cycle, improving vacancy trend, and high rental demand, the suburb has potential for moderate to high growth. If the announced infrastructure projects are completed on time and within budget, they could further drive up demand and prices. For example, if the median house price grows by 13.5% over the next 3 years, it could reach around $953,000, providing a significant return on investment for buyers who enter the market now.

## 7. Risks While no significant risk factors have been identified for Tullamarine, there are some potential risks to consider. The vacancy rate, although low, could increase if new supply comes online or if the rental market becomes less competitive. The suburb's limited development pipeline could also lead to supply constraints, driving up prices and reducing affordability. Additionally, the unemployment rate of 6.2% is slightly higher than the national average, which could impact demand for housing. However, the low flood risk and low bushfire risk, as indicated by the state planning portal overlay, reduce the risk of natural disasters impacting the suburb.

## 8. The Play For investors looking to enter the Tullamarine market, we recommend targeting a minimum gross yield of 3.5% to ensure cash flow stability. The ideal entry range would be around $600,000 to $800,000 for houses, and $450,000 to $650,000 for units. Watch signals include changes in the vacancy rate, rental demand, and infrastructure project timelines. A recommended strategy would be to hold existing properties and monitor market conditions, rather than buying or selling aggressively. Investors should also consider the potential for long-term rental income and the relatively stable economic base of the suburb.

This analysis is for informational purposes only and does not constitute financial, legal, or investment advice. Seek professional advice before making investment decisions.