What is the AIPN?

Who is James Cagney?

Melbourne Eastern suburbs property market

Written on the 21 May 2017 by James Cagney


(A 4 min read)

The eastern suburbs of Melbourne are a melting pot of cultures and demographic profiles. This report includes the eastern suburbs along the M1 (Monash Freeway)  and suburbs including Malvern East, Glen Waverley, Ferntree Gully, Narre Warren, Officer and Pakenham.  Suburbs to the North East are also included.

I will be tackling this area purely from an investment property purchase prospective rather than an owner occupier. Traditional homes in the Inner-Ring to the Outer-Ring east of the Melbourne CBD are expensive.  Having said that - there are one and two bedroom units which are worth looking at because many of the Gen X's & Gen Y's are more interested in the lifestyle that these suburbs provide - rather than buying a property in the suburb. You can buy one to two bedroom units in medium-rise apartment blocks (up to 50 units per site) from $360,000 which will yield between $360 up to $420 per week rent. These units will give you capital growth because of their proximity to the CBD of Melbourne.

Now let's go back to houses in the middle-ring suburbs. For example a traditional 4 bedroom house in Glen Waverley costs over $1.27 million. These properties have had a 73.3% increase in value over the last 5 years.  However, the medium rent in the area is only $520 per week. What investor wants to get a yield of only 2.1% and have the property thousands of dollars negatively geared?

However, it is a highly sought after area because of its proximity to two freeways and the Melbourne CBD.  The high education standards of public schools in the area are sought after by renters. So a renter will pay $520 plus per week to live in the suburb and be able to send their children to public school rather than pay the outrageous fees for private education. Renters get to mix with the upper class locals in the area and nobody asks at the local golf course whether you rent or own the property you live in. 

In Melbourne it is the school and university you attended which helps your professional career. Young families who do not have the deposit to put on a million dollar plus home can still live and be educated in these prestigious middle-ring suburbs.  I checked the availability on realestate.com and there were only 42 homes (4 bedroom) for sale and only 16 of homes for rent in Glen Waverley.  That tells it all.

I am not suggesting that you rush off and buy a house in Glen Waverley.  This is only an example of a middlering suburb. I also caution investors to look at the property cycle before they invest in these middle-ring suburbs. Please study my "Property Cycles and the Cycle of Market Emotions" model before you buy in these suburbs. Melbourne is in for a correction somewhere between 5 to 10% within the next 18 months and you do not want to buy at the peak of the market.  Click >>> CYCLES for this vital information.

Once you get past the inner-ring eastern suburbs you hit the biggest obstacle for growth in the eastern suburbs. The Monash Freeway - or, as the locals call it, the "Monash Carpark".  Long overdue widening of the Monash Freeway and the Warrigal Highway has caused a traffic nightmare. Forty kilometres outside the CBD of Melbourne its bumper to bumper traffic at peak hours a condition which only improves slightly during off- peak travel times. The problem for an investor who has bought in the area is that renters are fed up spending hours upon hours in the traffic. They want to move closer to the city or move to the western suburbs where traffic is much better. I think renters who work in the city or even in Dandenong will be reluctant to rent in the outer-ring of the eastern suburbs in the next few years.

The problem I foresee now is when the two new lanes are completed the surface of two lanes which are open now are being hammered by cars and trucks and  the freeway will be back to two lanes whilst they repair the existing two lanes. Outlying new developments in suburbs like Officer and Pakenham will be most affected by the traffic ergo growth and yields will be lower than areas in the west and south.

James Cagney has a good understanding of which eastern suburbs in Melbourne have good potential for investment.  James believes that demographics and price are the keys to potential growth in the western suburb of Melbourne. Investors must seek advice from real estate professionals who know the market. Factors these professionals must know are:

  • Infrastructure requirements and plans
  • Availability and location of pre-schools,  schools and tertiary education institutions
  • Parks and sporting clubs
  • Location and availability of public transport
  • Location and plans for shopping complexes
  • Commercial and industrial plans
  • Developments and builders with good reputation and facilities

Investors who don't know the area must be wary of just looking on the internet and believing what the spruikers have to say.   James Cagney has done his research into the estern suburbs of Melbourne and you can contact him on +61 416 137 645 or click >>> HERE. If you would like to know more about the Melbourne mproperty market that James Cagney has researched:

Coming in the next few weeks:

  • Melbourne South to the Pininsula
  • Melbourne North to Craigieburn
  • Melbourne Middle-Ring suburbs


This is not financial advice. You should not act solely on the basis of the material contained in this article for your investment strategies. Changes in government and legislation occur frequently and without prior notice and financial markets are unpredictable.
Please note that the information herein is of a general nature only and is not intended as specific advice for any particular person or entity.

This information was written and compiled by James Cagney.  The opinions expressed herein do not necessarily represent the views and opinions of his associates including
Asset Finance Pty Ltd.


Thank you to the resources of Terry Ryder, Property Observer, The ABS, BIS Shrapnel, Michael Matusik, Property Monitors, Colliers, On the House, Corelogic, RP Data, Residex, SQM, Herron Todd White, NAB Residential Property Survey, Australian Bureau of Statistics, Peter Wargent, Port Phillip Publishing, Economy & Markets, Harry S. Dent and the many others for the material discussed above.

Author: James Cagney
Bookmark SiteTell a FriendPrintMarketing and Business Problems