Sydney investors flock to Melbourne as locals stall

Sydney investors are snapping up Melbourne homes sight unseen, chasing higher yields and bargain prices while local buyers sit cautiously on the sidelines.

Interstate investors are swooping on Melbourne’s housing market as many local buyers remain cautious after years of rising taxes, tighter regulations and patchy price growth.

New data shows Melbourne is hosting 943 auctions this week — up 6 per cent on the same time last year — with another 772 scheduled for next week, according to PropTrack.

Suburbs with the most listings include Reservoir (19 auctions), Glen Waverley (18), Craigieburn (16), Mount Waverley (15), and Malvern East (14).

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But while local activity remains uneven, experts say a significant portion of investor momentum is now coming from interstate, particularly Sydney and Perth, where rising prices and falling yields are pushing buyers to seek better value elsewhere.

Ray White Werribee agent John Camilleri said he had recently seen contracts signed before payments cleared.

“We’ve seen properties in far worse condition sell in the $570,000 to $580,000 range, including one that sold over the phone to an interstate buyer,” Mr Camilleri said.

“The investors inspecting this one came in with full-blown itineraries, some of the most detailed I’ve ever seen.

“Right now, they’re swimming through fire to secure properties — they’re not mucking around.”

Reservoir, Glen Waverley and Craigieburn lead Melbourne’s auction hotspots this week, with hundreds of homes set to go under the hammer across the city. Photo: iStock/Ingrid Hendriksen

Mr Camilleri said many were chasing weekly rents above $600 and were making “aggressive plays” in suburbs like Werribee.

MR Advocacy director and buyers’ agent Madeleine Roberts said out-of-towners were now doing the maths on Melbourne and finding it stacks up.

“They’re less emotionally attached to the local market — and that’s giving them an edge,” Ms Roberts said.

MR Advocacy director Madeleine Roberts says interstate buyers are doing the maths on Melbourne, and making bold moves locals won’t.

She said strong rental yields and Melbourne’s relative affordability compared to Sydney, Brisbane and Perth were major drivers of renewed interest.

REBAA President Melinda Jennison said Melbourne was re-emerging as a prime opportunity.

“With stabilising rates, increased migration, and more stock hitting the market, the city is shaping up as a prime spot for savvy investors and first-time buyers alike,” Ms Jennison said.

Melbourne property is back in demand, but it’s interstate investors leading the charge, not local buyers.

REBAA Victoria state representative Matt Scafidi said the 2024–25 financial year had marked a turning point.

“While it lacked the explosive growth seen in other states, Victoria has remained a market of opportunity, particularly for discerning buyers with long-term outlooks,” Mr Scafidi said.

Belle Property Hockingstuart Victoria director Anthony Webb said confidence among local investors was still lagging.

“Victorian investors are still jaded,” Mr Webb said.

“But buyers from NSW and WA believe Melbourne has hit the bottom and are looking long term.”

Mr Webb said many locals were still “gun-shy” after a bruising few years of land tax hikes, regulatory change and rising holding costs — but that sentiment could shift quickly if rate cuts eventuate in the second half of 2025.

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david.bonaddio@news.com.au

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