Updated 4 Nov 2026 As the property market cools, and auction clearance rates falls, we're seeing a lot of properties being passed in at auctions in recent months. Frenzy biddings at auctions are a rare sight in most auctions now. When a property did not sell in the auction, it is known as being "passed in". What happens when a property was passed in at auctions? How do you negotiate for the property? Why did a property get passed in at auction? First, let's understands the basics. Property get passed in at auctions because the bidders at the auctions could not or would not meet the reserve price for the properties being auctioned. And, in some cases, there simply isn't any bidders for the property at all. That happens when an auction process is used for a property sales campaign, when it should not be. Inexperience, seller's demand or rapidly changing market condition are the primary reasons for this. What happens when a property did not sell at an Auction? A few things can happen when the hammer falls (or did not fall in this case) at the auction, and the property is left without a buyer. First and foremost, the property is considered passed-in, and unsold. There are no buyers. But what happens next? What happens next, depends on what happened during the auction, and the state the auction is held. Each state in Australia has their own variation of auction process and rules. In most cases, it can take one of these scenarios: Bidder with the highest bid usually get the first right to negotiate with the vendor and agent. Property is put back on the market, often as a private sale. Property is taken off the market. Vendor decides to change the real estate agent and/or marketing strategy. Property is being repossessed by the mortgagee. If the auction gives the highest bidder the first right to negotiate, and if you are not the highest bidder, you probably would not be invited for negotiation. Some more diligent agencies will also monitor who the 2nd highest bidder is, and leverage your presence and bid against the highest bidder. What is the First right to Negotiate after an auction? The first right to negotiate means you will be the first to be invited to the negotiating table. The auctioneer will not invite anyone else, and you will be the only person negotiating with the sales agent and / or seller, after the auction. In most auctions, the bidder with the highest unsuccessful bid will usually get the first opportunity to negotiate with the vendor and/or agent. This negotiation phase is when the pressure sell starts. It is usually yourself against a team of experienced sales agents and negotiators working together, against you, to "help you buy" that property. They are negotiate everyday, and they had been observing you, your body language, and your reactions throughout the auction, trying to gauge how much you wanted the house, and how deep your pocket is. And trust me, the negotiators will go for every cent you have. They are experienced and are trained for that. It is in the vendor's interests and the agent's interests that a deal is struck there and then, because properties sold at auctions (and within 3 days after auctions, in Victoria) are unconditional. It is a confirmed sale, and if your offer is accepted, you are legally obliged to buy it unconditionally. If you think the auction was pressurising, this stage will be at least 10 times more pressurising. Both the vendor and agents have the need to sell. The agents want their commission. The vendor wants to offload the property. And there you are, the buyer sitting alone in the room, with a team of them against you. They are trained and they are keen to make you buy for top dollar. It will take as long as it is necessary to negotiate. It could be minutes or it could be hours. And if the negotiation fails, the property is usually put back on the market, opened to all other purchasers, if it is not taken off market. How do you negotiate for a property after it has been passed in at auctions? Now, if you did not have the first right to negotiate, and if the property is put onto the market without a buyers, here is what you need to do. While doing your due diligence for the property, you would have an idea what the property is worth. And you would hopefully, got your darts in a row, and know how much you can afford to pay for it. Couple of question you need to ask yourself: Is your budget still relevant to the property? Are the owners expecting a lot higher than your budget? What was the real reason why the property passed in during the auction? How do you start buying a property which was passed in at an auction? When you come across a property that had been passed in at an auction, contact the agent. Some sales agents may openly tell you it had been passed in at an earlier auction, while some agents may needs a bit of prompting before they disclose this. Good buyers agents would usually have the right tools and market informant to access these information. Sales agents know they cannot get away with lying to buyers agents, and so, most sales agents are usually upfront and honest with buyers agents. After all, no one wants to look silly, and be caught lying when the information is already known. Understand your local laws on auction and sales made before and after the auction. In Victoria, sales made within 3 days before and after the auction, is unconditional. Ask yourself how badly do you want this property? If you want it so badly that you are happy to buy it unconditionally, put in an offer whenever you are ready. Otherwise, avoid that 6-day window. Sales agents would definitely want your offer within that windows, but you know the risks, if you do. What do you need to do before you make an offer for a property that was passed in? If you are interested in a property that had been passed in at an auction, you should always treat this as a newly listed property. You will need to redo your due diligence, even if you have already done your due diligence prior to the auction. There must be a reason why a group of buyers did not offer a good enough price for the property and thus, it DID NOT SELL during the auction. And you need to determine that. A few questions that needed answers include: Was the price too high? Was the vendor's expectations unrealistic? Was there something wrong with the property that you weren't aware of? What are the vendors expecting? What is a reasonable price for the property? How do you negotiate for a property that was passed in? Negotiate as if it is a new listing. Obviously, the group of bidders at the auction did not think the asking price was reasonable. Will you pay that price? You might, if you want the property bad enough, but, as buyers advocates, we wouldn't. As with any negotiations, you are against a team of professional negotiators. Our negotiation service can help you negotiate for the best outcome. Get in touch if you are keen with our services. It is ok if you choose to negotiate on your own. Just be firm, know what the property is worth, know what you want to pay, and negotiate. Will a property that got passed in at an auction sell at a lower price? No. It is not necessarily true. It depends on who the bidders were during the auction. And what the reserved price was. If the bidders at the auction happened to be unrealistic under bidders, the vendors definitely will not want to accept the low-ball offers. A townhouse in Melbourne South East suburb of Pakenham, with a price guide of $500k, was passed in at an auction which we attended last year. The highest bid of $470k during the auction did not meet the reserve price. Subsequent negotiations with the vendor and sales agents closed the sale at $538k. The sales agents definitely did a good job at negotiating for the vendor, as the price was way above market value. We initially shortlisted this property for a client, but we walked away from the purchase as we could not see value at that $538k price point. Will a property that got passed in at an auction sell at a higher price? No. Again, this is not necessarily true. It, again, depends on who the bidders are during the auction. And what the reserve price was. If the reserve price was too high for the property, bidders who had done their due diligence correctly, will definitely not want to pay that. Imagine overpaying for a property? You could be overpaying, sometimes, by half a million dollars. A house which we bought in Melbourne inner-city suburb of Ashwood, was passed in at an auction, with a highest bid of around $2.75 million. It obviously did not meet the reserve price, and subsequent negotiations by the sales agents failed to secure the sale. This house with a valuation of about $2.7M was subsequently re-listed for private sale, with a single price of $2.55M. As buyers advocates acting on behalf of our client, we made our offer, negotiated, and bought this property for $2.45M. A massive $300k cheaper than the highest auction bid and a $100k savings from the post-auction list price. The sales agent subsequently revealed that the property had a reserve of "around $3M", during the auction. Ie, if there was a successful bidder, they would have to pay at least $3M, during the auction. And we managed to bought it for a massive $500,000 savings post auction! Advice for Property Buyers With property auctions and making offers for a property, it is all about knowing what price to pay and when to walk away. Winning at property auctions is not always about successfully buying the property during the auction. You are way ahead of other property buyers when you know the market value. Know what the property is worth, and know when to walk away. You will definitely not want to pay more than an over-payer at any auctions. If you're unsure of the market, engage a professional Melbourne based buyers advocates who knows the local area to do help buy it. In the second example in this blog, the client paid a relatively tiny $20,000 buyers' advocates fee and in return, it saved them a whopping $500,000 when you realise it had a auction reserve price of close to $3million. Property Negotiation Service from Concierge Buyers Advocates Our property negotiation service helps buyers understand the valuation of the property, and negotiate and buy the property for the best possible price. Our Negotiation Plan will help you to negotiate up to 3 properties or an discounted upgrade path to our full buying service, giving you the comfort and confidence that we will have your back. Get in touch More home and investment property buying news and tips here.

Buying property in Melbourne is one of the most exciting and rewarding investments you can make. But the negotiation stage is inevitable, and this is where many buyers feel the most pressure, crumble, panic, and start overpaying for their properties. Navigating Melbourne’s competitive property market, dealing with seasoned real estate agents, and trying to secure the best price is always overwhelming. That’s why more and more savvy buyers are turning to a buyers agent in Melbourne, and consistently achieving negotiation success. What are the Buyers Agent's Secrets to Winning Negotiations? First and foremost, experience and confidence plays significant roles in the negotiation process. 1. Expert Representation with a Buyers Agent Melbourne When you work with a buyers agent in Melbourne, you have a local property expert on your side. Unlike the selling agent, who is paid to get the best result for the vendor, a buyers agent exclusively represents your interests. Your local Buyer's Agent's deep understanding of Melbourne’s suburbs, access to privileged information such as price trends, unpublished sales data, market trends and negotiation tactics means you gain a clear advantage in property negotiations. 2. Advanced Negotiation Strategies for Melbourne Buyers Melbourne property negotiations are complex and high-stakes. Our buyers advocates in Melbourne bring over 20 years of industry experience and sharp negotiation skills to the table. They use real-time property market data, recent, and undisclosed sales data, and their professional network to strengthen your position, often securing a better price, more favourable terms, and essential contract conditions that protect you. 3. Objective, Emotion-Free Negotiations Buying a home or investment property in Melbourne is emotional. In negotiations, the fear of missing out (FOMO) and fear of losing face often lead to rushed decisions and overpaying. The sales agents are skilled in detecting and manipulating emotions to their advantage. As a third party, an experienced Melbourne buyers agent remains calm and objective, managing negotiations with clarity and confidence, to ensure you don’t pay more than you should, removing emotion from the equation so you get the best deal. In a negotiation, it is always more effective to negotiate from a third party position. And this is why many professionals and large businesses use negotiators. 4. Access to Off-Market Melbourne Properties Many of the best property deals in Melbourne never appear on realestate.com.au or Domain. A buyers agent Melbourne gives you exclusive access to off-market and pre-market opportunities, often before the general public even knows about them. This means less competition, more choice, and increased negotiation power. 5. Save Time, Money, and Stress From searching for properties to negotiating and settling, a Melbourne buyers advocate takes care of every detail. You save countless hours, avoid costly mistakes, and enjoy a seamless, stress-free buying experience. Whether you’re a first home buyer, upgrader, or property investor, using a buyers agent in Melbourne is the smartest way to achieve a successful result. 6. Proven Success for Melbourne Property Buyers The proof is in the results. Buyers who use a buyers agent in Melbourne consistently achieve better outcomes. At Concierge Buyers Advocates, 95% of our clients secure their ideal property within two months, often at a lower price and with superior contract terms. That’s the advantage of having a professional Melbourne buyers agent negotiating for you. What is the Real Secret to Successful Negotiation in Real Estate? Now, let's take a step back. Step away from the world of real estate. When was the last time you made a significant purchase? Remember buying your car? Or had your car serviced and requesting the service advisor to give you a special 50% discount? Or negotiating for the restaurant waiter to give you an extra piece of succulent chicken thigh? What happened? Do the sales or service staff ended up "asking their manager for permission"? Now, did you remember attending an auction and the auctioneer pausing the auction to "seek advice from the vendor"? This is an important process in the negotiation strategy. It allows the auctioneer to pause, seek advice, and, in the process, create suspense. Auctioneers use this "break" to regroup their thoughts, or simply, allows them to step away from the stressful situation. Here's the industry secret: Some auctioneers simply pause, have a cup of coffee before returning to continue the auction. Here's why using a third party negotiator so powerful in negotiations: Studies have shown, negotiating as a third party has been proven to give you better buying outcome. Studies & Industry Reports on the Importance of Negotiating Using a Third Party 1. Academic Research Harvard Law School’s Program on Negotiation highlights that third-party negotiators, such as agents or advocates, often achieve better outcomes for their clients. This is because they bring objectivity, negotiation expertise, and emotional distance—reducing the risk of costly mistakes due to inexperience or emotion. "The Agent Effect": Several published studies (e.g., Valley, Neale, & Bazerman, 1992) found that negotiations conducted through agents often result in more optimal outcomes for both parties. Agents are less emotionally invested, can use established tactics, and are better at finding win-win solutions. 2. Real Estate Industry Data Buyers’ Advocates/Agents: Australian industry data (e.g., REBAA and Property Investment Professionals of Australia) consistently reports that clients who use buyers agents pay less on average, secure more favourable terms, and have a higher success rate in both finding and securing properties, especially in competitive markets. Vendor Advocates: Similarly, when sellers use vendor advocates or skilled real estate sales agents, they often achieve a higher sale price than those selling privately. 3. Behavioural Science Studies in behavioural economics (such as those referenced by Daniel Kahneman) show that individuals are prone to "loss aversion" and "anchoring bias" in negotiations, making them more likely to overpay or accept less favourable terms. EGO-Ego always gets in the way with DIY negotiators. We just do not want to lose out. We want to save our face, and you're always told by the agent that that extra $1000 will seal the deal. Third-party negotiators are trained to avoid these mental biases. Why Third Party Negotiators Perform Better at Closing Real Estate Deals In short, third party negotiators almost always give you better results because: Advantage How It Improves Outcomes Supporting Insight Emotional detachment Third parties aren’t anchored by your sunk costs, pride, or urgency, so they bargain firmly, walk away sooner, and avoid reactive concessions. Harvard’s Program on Negotiation lists “ego, unrealistic expectations, and emotion” among the top causes of poor DIY bargaining and recommends neutral intermediaries to manage them. pon.harvard.eduopentext.wsu.edu Information screening & framing An intermediary can filter what is shared (and when) to shield you from any toxic messaging, prevent you from reacting, and unintentionally exposing your walk-away price while still unearthing the other side’s real interests. Northwestern Professor Stephen Goldberg notes mediators improve outcomes by “facilitating the exchange of useful information without revealing exploitable details.” pon.harvard.edu Process expertise & pattern recognition Professional agents negotiate daily: they spot bait-and-switch tactics, unrealistic settlement timelines, hidden incentives, and can sequence offers for maximum leverage. Large-sample NBER study of corporate deal mediators found high-performing intermediaries closed 22 % more deals and did so faster than low performers. nber.org Credibility & perceived power When you negotiate through a specialist, the counter-party expects the negotiator to have benchmarked the market and have firm walk-away instructions, which counters hard-sell tactics and bluffing. Researchers in agent-assisted triads found sellers moderated opening demands when facing an experienced buyer’s agent versus the end buyer directly. link.springer.com “Blame-buffer” effect If talks stall, the buyers agent can play the “bad cop,” preserving goodwill between you and the other party for future dealings (or post-purchase relationships like hand-over or lease). Textbook conflict-management literature cites third-party negotiators as a tool to keep relationships intact while still pushing for optimal terms. ecampusontario.pressbooks.pubopentextbooks.org.hk Time & bandwidth Complex deals involve scheduling inspections, valuations, counter-offers, and legal reviews. Offloading the stress keeps your sanity and momentum high—both correlate with better prices. “Effective mediators improve bargaining outcomes by helping buyers and sellers come to agreements faster,” NBER working paper. nber.org As seen above, independent studies and industry data supported the conclusion that having a third-party negotiator—like a buyers advocate in Melbourne—delivers better results for property buyers. They bring objectivity, has the skills, and local knowledge, privileged information and understands human behaviours which help them manage the agent and control the negotiation, translating into more successful outcomes. Ready to Ace in Melbourne Property Negotiations? If you’re looking to buy a home or investment property in Melbourne, don’t go it alone. Engage a professional buyers agent in Melbourne and maximise your success at every stage of the negotiation process. Contact Concierge Buyers Advocates today to discover how our expert team can help you find and secure the right property at the right price—stress-free.

By Concierge Buyers Advocates | Updated October 2026 Should you invest in metropolitan Melbourne or regional Victoria? This is one of the most common questions property investors ask us. After all, when you realise that a $700,000 budget might buy you a modest three-bedroom house on a 250sqm block in Melbourne's outer suburbs, but often a much larger four- or five-bedroom house on 700sqm of land in regional Victoria, the regional option can look very attractive. You might even get a higher rental return while spending less. Is regional Victoria actually a better investment? Both markets can deliver excellent results. Both can also produce years of disappointing returns if you buy the wrong property, pay too much or underestimate the holding costs. Melbourne generally offers a larger employment market and a broader pool of potential buyers when it's time to sell. Regional Victoria often offers more affordable properties, stable rental tenants, stronger rental yields and potentially lower borrowing costs. However, cheaper doesn't necessarily mean better value. Neither is buying in an expensive Melbourne suburb. It doesn't automatically guarantee superior capital growth. Ultimately, the better investment depends on what you buy, where you buy, how much you pay and what you're trying to achieve. The best is still to get a property tailored to your investment goals and risk appetite. You maximise your investment returns without loosing sleep at night. Let's examine the differences using market data, real investment examples and some of the factors we consider when selecting properties for our investor clients. Melbourne vs Regional Victoria: Understanding the Differences Before looking at specific locations, here's how the two markets generally compare. Factor Metropolitan Melbourne Regional Victoria Purchase price Generally higher, particularly in established suburbs Often more affordable, although desirable coastal and commuter locations can be expensive Rental yield Premium houses usually have lower yields, while apartments and affordable houses may offer better returns Often higher yields, particularly in more affordable towns Employment Larger and more diversified employment market Major regional cities can have diversified economies, while smaller towns may rely on fewer industries Capital growth Established locations with limited housing supply can attract strong long-term demand Selected locations can outperform Melbourne, but growth can be inconsistent Resale demand Generally a larger pool of potential buyers Potentially fewer buyers, particularly for expensive or unusual properties Housing supply Apartment developments and outer-suburban housing estates can increase competition Large regional housing estates can also create oversupply Property management Generally more property managers and tradespeople available Local knowledge is important, and maintenance may be more difficult in remote locations Renter's Tenancy Turnover tends to be higher, averaging 1-2 years. Tenants tends to stay longer. 3 years, 5 or even 10 years or longer is common. These are general observations, not rules. Some Melbourne suburbs offer excellent rental returns, while certain regional locations have expensive properties with relatively poor yields. The same applies to capital growth. A well-selected regional property can outperform a poorly selected Melbourne property, and vice versa. That's why we prefer to compare individual locations and properties rather than simply labelling one market metropolitan and the other regional. Melbourne vs Regional Victoria: What Does the Market Data Tell Us? The Victorian property market has experienced significant changes over the past two years. According to the Real Estate Institute of Victoria (REIV), median house prices increased by 2.7% in metropolitan Melbourne and 2.5% in regional Victoria during the September 2025 quarter. A year later, the September 2026 figures painted a different picture. Metropolitan Melbourne's median house price declined 0.7% to $943,000. Regional Victoria's median house price increased 1.2% to $673,500. [1, 2] Meanwhile, Cotality reported that Melbourne's dwelling values declined by 3.4% during the September 2026 quarter. [3] Why the difference? REIV's median prices reflect the properties sold during a particular period, while Cotality's dwelling value index uses a totally different methodology that tries to artificially mimic a valuation, to arrive at a guesstimated price. Neither measure necessarily tells us how much an individual property has appreciated or depreciated. Understanding how these 2 numbers are derived is critical to understanding what the data shows and what it means. For example, if more expensive houses happen to sell during a particular quarter, a suburb's median sale price could increase even when individual property values haven't changed significantly. Now, given the recent 2026 Budget changes, investors have shifted from investing in established properties to buying new properties, which are often more expensive than established (resale) ones, which can explain why the fall post Budget 2026 announcement, appears smaller in the REIV's number. If you want more detailed explanation, this article explains why median suburb price is never a good indicator of suburb performance This is why we don't recommend choosing an investment location based solely on suburb growth statistics. The Problem With Regional Victoria's Performance Data There's another important consideration when analysing the performance data of regional property markets. Regional Victoria isn't one homogeneous market. Some locations have experienced exceptional growth, while most others have remained relatively stagnant for years. When these results are combined into a single regional median, which is often the case for regional locations, the stronger performance of prime locations can be diluted by weaker-performing towns. The reverse is also true. Strong growth in a few locations can make the wider regional market appear more attractive than it actually is. This is particularly important because regional property markets are often smaller and can be more sensitive to local economic changes. Employment opportunities, infrastructure, housing supply and even the closure of a major employer can influence property values considerably. In other words, knowing that regional Victoria outperformed Melbourne doesn't often tell us which regional locations are worth investing in. That requires considerably more research. Case Study: Comparing Four Victorian Property Markets To illustrate this, let's compare four locations using house sales and rental data available as at 20 October 2026. The suburbs were selected to represent different markets and the $700,000 price points, not because we're predicting they'll become the next property hotspots. Glen Waverley represents an established, premium Melbourne suburb. Glen Waverley represents the type of location and property $700k can buy in regional Victoria Werribee is a typical more affordable $700k location Melbourne location frequently discussed (probably hyped) by investors in social media. Bendigo is another location often mentioned in social media, and it represents a major $700k regional city, while Morwell represents what a $700k location in Melbourne looks like in regional Victoria. Property Prices, Rental Returns and Capital Growth Location Median House Price 1-Year Growth Weekly Rent Gross Yield 10-Year Growth Glen Waverley – Melbourne $1,675,000 -1.6% $800 2.48% 24.5% Werribee – Melbourne $674,000 +7.0% $470 3.63% 141.9% Bendigo – Regional $662,500 +10.4% $513 4.03% 98.3% Morwell – Regional $429,500 +19.3% $420 5.08% 167.4% Sources: realestate.com.au suburb profiles [4–7]. Figures reflect the published October 2025–September 2026 snapshots. Bendigo refers to the suburb rather than the entire Greater Bendigo municipality. Gross yield is calculated using median weekly rent × 52 ÷ median house price. These are indicative comparisons, not the actual yields of individual properties. Historical median price growth is also not necessarily the capital growth achieved by an individual property. What the 12 Month Performance Data Tells Us There are some interesting observations here, particularly when we look beyond the last 12 months. Firstly, Morwell, despite having the lowest median house price, is our star performer in the past 1 year. It recorded the strongest growth over both the 1-year and 10-year periods. It also offered the highest indicative rental yield. Secondly, Werribee outperformed Bendigo over the past 10 years, despite Bendigo recording stronger growth over the past year. And then there's Glen Waverley. Often regarded as one of Melbourne's blue-chip suburbs, Glen Waverley has the highest entry price in our comparison, yet recorded the lowest growth over both periods and the lowest rental yield. Does this mean Glen Waverley is a poor investment location? Not necessarily. Buyers buy Glen Waverley for its amenities and access to good schools, and public transport. However, it does challenge the common assumption that buying in an expensive, established Melbourne suburb automatically delivers superior investment returns. The same applies to regional Victoria. Morwell's historical performance doesn't mean every regional town will deliver similar results. In fact, many regional locations have experienced extended periods of stagnant or declining property values. Social media has only started picking up Morwell, but.. The best buying time is 2 years TOO LATE. And this is another common problem with lazy investing... Problem with relying on social media for investment location selection Relying on social media for recommendations, is often the most popular method of "due diligence"... "Most recommended" locations are usually identified only after prices has grown significantly, and that's usually 2-3 years AFTER it started growing. That is also the time when most growth locations reach their peaks. The lesson here is that selecting the right location matters far more than simply choosing between metropolitan Melbourne and regional Victoria. This is also why we don't recommend investing based purely on suburb popularity, social media recommendations or recent growth statistics. A suburb that performed exceptionally well over the past 12 months isn't necessarily going to perform well over the next five or ten years. And a suburb that has been relatively stagnant may offer better opportunities if its fundamentals are improving. Reaping the maximum benefit from your investment involves identifying the opportunities BEFORE they become obvious to everyone else. But this is often the most difficult part of the real due diligence, especially if the investor do not have the experience or the time/resources to do a proper investigation. What Our Actual Melbourne vs Regional Victoria Purchases Show We've seen these differences firsthand through properties purchased for our investor clients. During 2025–2026, some of our Melbourne investment purchases recorded estimated growth of approximately 3–5%, while selected regional investments achieved between 10–20% over comparable periods. One particularly interesting example involved two investors with similar budgets who purchased within approximately one month of each other. Both had around $550,000 to invest. Based on our research and analysis, we recommended selected regional Victorian locations where we believed the investment fundamentals were stronger. One investor followed our recommendation and purchased a house in Gippsland for $510,000. The property was subsequently leased for $525 per week. The other investor preferred metropolitan Melbourne and purchased a house in a Social Media Hotspot in Western Melbourne for $550,000, which was leased for $420 per week. Fast forward approximately one year to October 2026, let's look at their results. Comparing Their Investment Results Regional Victoria Western Melbourne "Hotspot" Purchase price $510,000 $550,000 Weekly rent $525 $420 Initial gross rental yield 5.35% 3.97% Estimated property value, October 2026 $700,000 $595,000 Estimated capital growth 37.3% 8.2% Estimated increase in value $190,000 $45,000 These are actual client purchase figures and subsequent estimated property values, not independently realised resale results. Rental yields are based on the original purchase prices and stated rents, before expenses. Despite purchasing at a lower price, the regional investor achieved substantially higher estimated capital appreciation and rental income. The difference in estimated capital growth was approximately $145,000. And the regional investor received another $105 per week in rental income. That's $5,460 more in annual gross rent, assuming both properties remained fully tenanted. Of course, this is one example, and an appropriate REAL example, using actual performance figures, given the similar budget and purchase timeframes. The regional property's unusually strong performance shouldn't be treated as a typical annual return. Not every regional property will outperform Melbourne. In fact, plenty won't. This real case study showed why good locations in regional Victoria can easily outperform popular investment destinations. Sometimes the better investment isn't the one everyone is talking about. It's the one where the numbers, location and fundamentals actually stack up. If You Have A Budget of $700,000 to Invest, Where Should You Invest in 2027? Do You Really Need to Spend It All? Here's another question asked by investors. And it is also something often overlooked by investors. If you have a budget of $700,000, where should you invest in Melbourne? Let's say an investor approaches us with a $700,000 purchase budget and initially wants to invest in metropolitan Melbourne. At that price point in 2026, the realistic options may include a fairly basic three-bedroom house in an outer suburb or a townhouse or unit closer to the CBD. But what if we identified a suitable property in Regional Victoria for $600,000 instead? Will you consider the regional Victorian property, and keep the $100,000 change? Assume both properties satisfy our location, condition and investment criteria. Comparing Two Hypothetical Investments Melbourne Property Regional Property Purchase price $700,000 $600,000 Illustrative weekly rent $480 $500 Annual gross rental income $24,960 $26,000 Gross rental yield 3.57% 4.33% Difference in purchase price — $100,000 less These are hypothetical figures to illustrate the financial comparison. They are not rental appraisals, forecasts or recommendations for any specific suburb. In this example, the regional investor spends $100,000 less but receives slightly more rental income. That's already worth considering. However, the bigger advantage may be what happens to the $100,000 that wasn't spent. Just because you have a budget of $700,000 doesn't mean you should spend the entire amount. If You are a Cash Investor, What Should You Consider? For an investor purchasing outright, the calculation is simple. Instead of spending $700,000, they purchase a suitable property for $600,000 and retain the remaining $100,000. That's $100,000 that can remain in a high-interest savings account, term deposit or other suitable investment. For example, at an illustrative 4% annual interest rate, the $100,000 could generate another $4,000 per year before tax. Combined with the regional property's hypothetical rental income, that's $30,000 in annual gross income, compared with $24,960 from the $700,000 Melbourne property. The investor also retains access to $100,000 in capital. That money could be used for property improvements, unexpected repairs, other investments or simply as a financial reserve. Naturally, the comparison assumes purchase costs are funded separately. Stamp duty, legal expenses and other acquisition costs would reduce the amount available if the investor's $700,000 was an all-inclusive budget. If You're Borrowing 80%, What Should You Consider? The calculation is slightly different if the investor uses finance. Assume an 80% loan-to-value ratio and a hypothetical interest rate of 6.5%. $700,000 Melbourne $600,000 Regional Purchase price $700,000 $600,000 20% deposit $140,000 $120,000 Loan amount $560,000 $480,000 Annual interest at 6.5% $36,400 $31,200 Annual gross rent $24,960 $26,000 Rent less interest -$11,440 -$5,200 Illustrative interest-only calculations, before rates, insurance, management fees, maintenance, land tax, vacancy and tax consequences. The lower-priced property requires $20,000 less in deposit and $80,000 less in borrowing. At 6.5%, that $80,000 reduction in debt saves approximately $5,200 in annual interest. Combined with the $1,040 difference in annual rental income, the regional investment has a $6,240 annual cash-flow advantage before other expenses. It would also generally attract lower stamp duty because of the lower purchase price. The investor hasn't literally received $100,000 in cash change when using finance. Instead, they've committed $20,000 less of their own capital and taken on $80,000 less debt. But the overall financial benefit can still be substantial. What About Capital Growth of Melbourne vs Regional Victoria Properties? This is where investors potentially need to consider the trade-off. Assuming both properties increase in value by 5%, the $700,000 property gains $35,000, while the $600,000 property gains $30,000. The more expensive property produces an additional $5,000 in capital growth. However, the investor has committed another $100,000 to achieve it, and you might need to consider the opportunity costs of that additional $100,000. And then, there's another possibility: What if the cheaper $600,000 property is located in an area with better investment fundamentals and subsequently achieves stronger capital growth? As our actual client example demonstrates, this can and DID happen. A well picked location in Regional Victoria can outperform Melbourne investments. Of course, the reverse is also possible. A $700,000 Melbourne property could outperform the regional alternative by a substantial margin. That's why we don't recommend buying a cheaper property simply because it's cheaper. The objective isn't to spend less money. It's to achieve the best investment outcome for the capital you're committing and the risks you're taking. Sometimes that means spending the full $700,000. Sometimes it means buying a better-value property for $600,000 and keeping the difference. And sometimes, if neither option makes investment sense, the right decision is not to buy at all. Quality of Properties: What Can You Actually Buy? Another significant difference between metropolitan Melbourne and regional Victoria is the type and quality of property available at a particular price point. In Melbourne, a $700,000 budget may restrict investors to smaller houses in outer suburbs, townhouses or apartments. In regional locations, the same budget could usually purchase a larger family home with four or five bedrooms, multiple living areas, a double garage and substantially more land. This difference matters because the quality of the property itself influences who is likely to rent it. For example, a modern four-bedroom home close to a regional hospital, university or major employment centre may appeal to professional families seeking a long-term residence. A small three-bedroom house in an industrial or logistics-oriented outer Melbourne suburb may appeal to a different rental market. Neither tenant group is inherently better than the other. What matters is whether the property is suitable for local rental demand, affordable to the target tenants and likely to remain attractive over time. In some regional markets, particularly where employment is stable and tenants are seeking family accommodation, long-term tenancies of three, five or even ten years are possible. Longer tenancies can reduce vacancies, reletting expenses and periods without rental income. However, investors shouldn't assume regional tenants will always stay longer. Tenant turnover depends on the property, employment conditions, local demographics, rent affordability and the individual tenancy. The objective is to purchase a property that consistently attracts suitable tenants, rather than simply chasing the highest advertised rent. 7 Things Investors Need to Consider When Investing in Regional Victoria Investing in regional locations, including Regional Victoria, required careful research and due diligence. Location: Always Visit—Data Will Not Tell You Everything Unlike metropolitan areas, where thousands of data points are available, regional locations often have less detailed data. This is because there are typically fewer properties and fewer sales and rental transactions. As a result, performance metrics such as occupancy rates, sales figures and environmental metrics such as socioeconomic, geographical indicators need to be interpreted with care. Visiting the area in person is essential, as the available data may be too broad or outdated to provide a complete picture. If you outsourced this research and shortlisting to a Buyers Advocates, ask how are they researching the location. If they does not include an in-person visit and assessment of the location, run. They have no idea what they are doing. Employment: One of the Most Important Regional Investment Fundamentals When assessing regional investment locations, employment opportunities are among the first factors we investigate. A town supported by healthcare, education, manufacturing, government services and other industries is generally better positioned than one relying heavily on a single employer. Geelong provides a useful example. According to the City of Greater Geelong, during the year to June 2025, the local economy recorded employment increases of: 1,235 jobs in manufacturing. 868 jobs in healthcare and social assistance. 583 jobs in education and training. [8] This diversity helps support housing demand from several employment sectors. Now contrast that with a smaller town heavily dependent on a mine, power station or major industrial facility. If that employer closes or significantly reduces its workforce, the effects can flow through to rental demand and property values. The Latrobe Valley is one example worth examining. The energy sector is one of the major employer in the Latrobe Valley. And, it is also important to be aware that EnergyAustralia has scheduled the retirement of the Yallourn power station for mid-2028. [9] That doesn't automatically make Morwell or neighbouring towns poor investment locations. However, investors need to understand how the local economy is changing, what replacement employment is being created and whether those jobs are sustainable. A major infrastructure project might generate hundreds of construction jobs for several years. But what happens when construction finishes? Will those workers remain in the area? Will permanent employment replace the temporary jobs? These are important questions that historical suburb growth statistics won't necessarily answer. Housing Supply: Population Growth Isn't Everything Population growth is frequently promoted as a reason to invest in a particular suburb or town. While population growth certainly contributes to housing demand, it needs to be considered alongside housing supply. If new housing supply grows faster than demand, property prices and rental growth tends to suffer. This applies to Melbourne's outer suburbs as much as regional Victoria. Consider Armstrong Creek, near Geelong. The Armstrong Creek growth area is planned to accommodate approximately 22,000 homes. [10] That's the overall development plan, not the number of homes suddenly coming onto the market. The government knows that, and the developers knows that. By limiting the number supply of new houses, the impact to prices are be managed. If the supply is suddenly released, as in the suburbs around Tarneit, investors purchasing a newly built house in the estates may discover that several similar homes are available for rent or sale nearby. That competition can affect both rental returns and resale prices. There's also an important difference in scale. Adding 100 new homes to a small regional market can have a proportionally greater impact on local supply than adding 100 new homes to a much larger metropolitan housing market. This is why it is important to examine housing supply and population growth together, not in isolation. A growing population doesn't automatically create property scarcity. Rental Yield vs Actual Cash Flow in Regional Victoria One of the biggest attractions of regional property investment is the potentially higher rental yield. But gross rental yield only tells part of the story. Let's use Morwell as an example. Based on the median figures discussed earlier, assume an investor purchases a property for $429,500 and receives $420 per week in rent. We'll assume an typical 80% interest-only loan with an illustrative interest rate of 6.5%. Investment Metric Annual Amount Rental income: $420 × 52 weeks $21,840 Loan amount $343,600 Interest expense at 6.5% $22,334 Cash-flow shortfall before operating expenses -$494 Despite an attractive gross rental yield of approximately 5.08%, the property is already negatively geared before accounting for other ownership expenses, such as council rates, insurance, property management fees, maintenance, applicable land tax and potential vacancy periods. Principal repayments, where applicable, would further increase the investor's cash requirements. This doesn't mean Morwell is a poor investment location. It illustrates why a high rental yield does not necessarily mean positive cash flow. The same calculation should be carried out for every investment property, whether it's in Melbourne, Ballarat, Bendigo or Gippsland. Don't Underestimate Maintenance Costs Maintenance costs is another cost investors need to consider. Some investors assume that because a property is cheap, the financial risks are automatically lower. That isn't always the case. The cost of material is the same, and in some cases, more in regional locations. Same with labour costs. Because trademen tends to have less competition, plus greater travel distances, costs of labour tends to be higher. Take a hypothetical $15,000 repair bill. For a $430,000 property, that represents approximately 3.5% of the purchase price. For a $1.5 million property, the same repair represents only 1%. Of course, expensive properties can also have expensive repair bills. But a relatively modest repair can consume a significant proportion of the rental income or expected returns from a cheaper investment property. This is particularly relevant when purchasing older properties that may require substantial maintenance or upgrades. Land Tax and Other Victorian Ownership Costs Investing in regional Victoria doesn't mean escaping Victorian property taxes. Land tax generally depends on the taxable site value of your landholdings and your ownership circumstances, rather than whether the property is located in Melbourne or regional Victoria. The value of land per square metre is usually lower in many regional locations compared with established Melbourne suburbs. As a result, a regional property sitting on 700sqm of land may have a considerably lower taxable land value than a similarly sized property in a premium Melbourne location. However, this isn't universally true. Site values need to be checked individually. Land tax also depends on your total taxable landholdings, ownership structure and any applicable surcharges. [12, 13] If you already own several investment properties, these costs can become significant. Investors should also allow for stamp duty, conveyancing, building inspections and eventual selling expenses. Property investment is generally a long-term strategy. Transaction costs can make short-term property investment particularly unattractive. Resale Demand: How Easy Will It Be to Sell? Capital growth is important, but investors should also consider how easily they can sell when the time comes. Melbourne generally has a larger pool of potential buyers. In smaller regional markets, the number of active buyers can be significantly lower. This becomes particularly important for unusual properties or expensive homes sitting well above the local median price. For example, the suburb profiles used earlier reported median selling times of approximately: 31 days in Glen Waverley. 56 days in Morwell. [4, 7] These are historical figures rather than guarantees of how long a particular property will take to sell. Nevertheless, they illustrate an important consideration. A property that looks attractive while generating rental income may become considerably less attractive when you need to sell quickly. For investors who may need access to their capital, resale demand and market liquidity shouldn't be overlooked. Environmental Risks: Flooding, Bushfires and Insurance Property investment isn't just about prices, rents and population growth. The physical location of a property is equally important. Victoria has a varied landscape, ranging from mountainous and heavily forested areas to broad inland plains and low-lying floodplains. In parts of regional Victoria, particularly across flatter inland areas beyond the Great Dividing Range, floodwaters can spread over extensive distances and may remain for weeks. Unlike shorter, faster-flowing river systems, flooding across broad inland floodplains can affect large areas and for a longer duration. The 2022 floods, which affected communities including Rochester, Mooroopna and Shepparton, are reminders of how serious these events can be. [11, 18] Bushfire exposure is another consideration. Open grasslands can support extremely fast-moving grass fires under hot, windy conditions. Once dry grass ignites, strong winds can carry fire across large areas of open country. Forested and hilly regions face different bushfire risks, including more intense fires under certain conditions. [19] These risks don't mean investors should avoid regional Victoria. In fact, properties just a short distance apart may have very different levels of exposure. What matters is the specific property and its location. When assessing an investment property, we recommend checking flood overlays, bushfire exposure, drainage, surrounding terrain, building condition and insurance costs. Metropolitan Melbourne properties aren't exempt from these risks either. A property offering an attractive rental yield may become a much less attractive investment if insurance premiums or environmental risks are unusually high. What Will Change for Victorian Property Investors in 2027? Looking ahead to 2027, several regulatory and taxation changes will affect property investors. These changes apply across Victoria, not just Melbourne. New Victorian Rental Energy Efficiency Standards Victoria's new minimum rental energy efficiency standards will be introduced in stages from 1 March 2027. They cover heating, cooling, hot water systems, showerheads, ceiling insulation and draught proofing. Additional draught proofing requirements commence on 1 July 2027. [14] The requirements don't all take effect at once. Some apply when a new rental agreement begins or an existing agreement becomes periodic. Others are triggered when equipment breaks down and cannot be repaired. Exemptions may also apply. For investors purchasing older properties, these changes could mean additional expenses. An inexpensive regional house requiring substantial upgrades might not be such a bargain once those costs are included. The same applies to older houses and apartments in Melbourne. We are expecting investors to pay more attention to properties that already meet the requirements, or where the cost of achieving compliance is relatively modest. Budget 2026 Federal Negative Gearing and Capital Gains Tax Changes The Federal Government's 2026–27 Budget introduced major changes to negative gearing and Capital Gains Tax (CGT). From 1 July 2027, negative gearing concessions will be restricted for many established residential investment properties purchased after 7:30 pm AEST on 12 May 2026. Under the announced arrangements, investors in affected established properties can generally offset rental losses against other residential property income or carry excess losses forward, but cannot offset them against salary or wages. Properties held before the announcement and eligible new residential properties receive different treatment. CGT arrangements are also changing for gains accruing from 1 July 2027, including a move towards inflation-based adjustments and a minimum tax rate on real capital gains, subject to the applicable rules. The first stage of legislation has passed, with further provisions and transitional arrangements requiring consideration. [15, 16] Investors should obtain independent tax advice before making decisions based on these changes. How Might These Changes Affect Property Investment? In our view, these changes will and already have influenced investor behaviour and property selection. Properties with lower holding costs may become more attractive to investors who can no longer offset certain losses against employment income. Eligible new properties may also attract additional investor interest because of their different tax treatment. However, buying a new property simply because it offers a tax advantage can be a costly mistake. Purchase price, construction quality, location, available housing supply and future resale demand remain critically important. Tax benefits should support a sound investment decision, not be the main reason for making one. Melbourne vs Regional Victoria: 2027 Property Market Outlook Looking towards 2027, we expect the Victorian property market to remain uneven. Different suburbs and property types are likely to perform differently, and we don't believe investors should expect a broad-based recovery across every location. This is our assessment rather than a statistical forecast. It assumes employment remains reasonably stable and borrowing costs don't experience another major upward shock. Melbourne: Opportunities Are Emerging, but Be Selective Melbourne property prices has already lagged all other major Australian Capital Cities. We believe Melbourne's more affordable and well-established residential markets deserve particular attention. Suburbs such as Werribee, where housing remains relatively affordable compared with Melbourne's premium suburbs, may continue to attract buyers seeking value. However, investors should pay close attention to the neighbourhood, competing housing supply and property types. Premium and blue-chip Melbourne suburbs may also present opportunities, particularly where sellers become more negotiable. For investors with sufficient borrowing capacity and a long investment horizon, buying a quality property at a sensible price during a quieter market can be worthwhile. A Melbourne-wide recovery shouldn't be taken for granted. Prices had been depressed for too long, and it has a lot to catch up, once the conditions are right. Regional Victoria: Strong Fundamentals Will Matter More Regional locations with diversified employment, established infrastructure and sustainable tenant demand may continue to perform relatively well. Bendigo, Ballarat and selected regional centres deserve consideration. However, we would be cautious about purchasing simply because a town recorded strong capital growth in 2026. Some markets may already have experienced significant price increases, while others could face future challenges from employment changes or housing oversupply. The question isn't simply which regional town grew the fastest. It's whether the property still represents good value at today's price. Holding Costs Will Become Increasingly Important With changes to taxation and rental property requirements, we expect investors to pay closer attention to net rental returns. Interest expenses, insurance, maintenance, land tax and compliance costs can quickly erode the difference between a property yielding 4% and one yielding 5%. Investors should also be conservative when forecasting rental increases. Cotality's October 2026 rental market review reported slowing national rental growth and increasing affordability pressures on tenants. [17] A property that is difficult to afford today shouldn't depend on substantial future rent increases to become financially viable. What Could Change This Outlook? If borrowing costs fall and buyer confidence improves, Melbourne's premium markets could recover more strongly than our current expectations. On the other hand, if interest rates remain restrictive or unemployment increases and expanding instabilities across the world, both metropolitan and regional property markets could experience further weakness. Properties in smaller regional markets with limited buyer demand may be particularly difficult to sell during a downturn. As always, investors should not consider certain locations favourable simply because of social media exposure, or exclude other locations because of preconceived perceptions. Investors should consider all locations, scenarios, before picking the appropriate location and strategy, rather than rely on a single prediction. So, Which Is the Better Investment: Melbourne or Regional Victoria? Simply based on recent performance, Regional Victoria champs over Melbourne. However, as we all know, past performance is not a reliable indication of future performance. There is no single right or wrong answer. Investors should pick the right strategy for the location, based on your budget, goals and risk appetite. For an investor with a strong income, substantial financial reserves and a long-term investment horizon, a well-selected Melbourne property may justify a lower initial rental yield. For someone seeking a more affordable entry price, a smaller mortgage and stronger rental income, a carefully selected regional property may be more suitable. However, the comparison shouldn't stop at rental yield or historical capital growth. A good investment needs to make sense at the price you're paying today. It should attract suitable tenants, have manageable ongoing expenses and offer reasonable prospects for capital growth and resale. And as our $700,000 example above demonstrates, investors should also consider whether spending less could actually produce a better overall financial outcome. A $600,000 property with stronger fundamentals and lower holding costs may be a better investment than a $700,000 property purchased simply because the bank is prepared to approve your mortgage. More importantly, the best investment isn't necessarily the location that has performed best over the past 12 months. It's one that has the right fundamentals to continue performing over the years ahead. We would rather purchase a well-located property with sustainable long-term demand than chase a suburb simply because it is often mentioned in social-media. And if neither option represents good value at the time, sometimes the best decision is to look elsewhere or hold off buying. How Concierge Buyers Advocates Can Help At Concierge Buyers Advocates, we had been helping investors of all budget pick and invest in regional Victoria locations for over 11 years. Our approach goes beyond comparing suburb growth statistics and rental yields. We assess investment properties across metropolitan Melbourne and regional Victoria, examine the actual property, its location, purchase price, condition, rental demand, holding costs, competing supply and likely future resale market. We also consider how the investment fits your budget, borrowing capacity and longer-term objectives. Whether you're considering a Melbourne investment property or looking for opportunities in regional Victoria, our objective is the same: Help you buy the right property, at the right price, for the right reasons. And when a property doesn't stack up, we'll tell you why. Considering an investment property in Melbourne or regional Victoria? Contact Concierge Buyers Advocates for an initial discussion about your investment objectives and how we can assist with your property search, due diligence and purchase negotiations. Disclaimer This article provides general information only and does not constitute personal financial, taxation or legal advice. Market data represents historical performance and does not guarantee future returns. Case studies illustrate individual investment outcomes and should not be interpreted as typical results. Investment scenarios are illustrative and exclude certain transaction and holding costs unless otherwise stated. Investors should seek independent professional advice appropriate to their circumstances. Sources and References Retain the 19 existing linked references from the published article, including: REIV – September 2025 quarterly market release. REIV – September 2026 quarterly market release. Cotality – Monthly Housing Chart Pack, October 2026. realestate.com.au – Glen Waverley suburb profile. realestate.com.au – Werribee suburb profile. realestate.com.au – Bendigo suburb profile. realestate.com.au – Morwell suburb profile. City of Greater Geelong – Work and investment. EnergyAustralia – Yallourn energy transition. City of Greater Geelong – Armstrong Creek growth area. VICSES – Storm damage hotspots and local flood guides. State Revenue Office Victoria – Current land tax rates. State Revenue Office Victoria – Understanding land tax. Consumer Affairs Victoria – Minimum rental energy efficiency standards. Australian Treasury – Budget 2026–27 tax system changes. Australian Treasury – CGT and negative gearing legislation. Cotality – October 2026 rental market review. Geoscience Australia – Flood. Country Fire Authority – Rural grassfires. Market figures retain the article's 20 October 2026 snapshot. Property market data, interest rates, tax rules and regulatory requirements are subject to change.

Higher rental income sounds attractive. But after management costs, vacancies, maintenance, compliance and capital expenditure, how much better off are investors really? Rooming houses are increasingly being marketed to Australian property investors as an alternative to conventional residential investment properties. Some promoters advertise net rental yields of 8–10%, considerably higher than the rental yields typically associated with traditional houses in Melbourne. For investors struggling with rising holding costs, land tax, insurance and mortgage repayments, the attraction is understandable. Instead of renting an entire house to one household, why not rent individual bedrooms to multiple tenants and collect significantly more rent? The numbers look appealing. But there is a difference between collecting more rent and making a better investment. Rooming houses are not simply ordinary houses with extra tenants. They operate under additional legislation, building requirements, licensing arrangements and management obligations. And, as several Victorian enforcement cases have demonstrated, getting those requirements wrong can have serious financial and legal consequences. What is a rooming house? In Victoria, a rooming house generally involves one or more rooms available for rent where four or more people can occupy the house. How does a Rooming House work? Each renter enters into separate rental / leasing agreement with the landlord or accommodation provider, to rent a room for a period of time. The lease is usually includes: a rooms, which are usually furnished, better equipped ones may have individual toilets or even kitchenettes toilets, kitchen and laundry are usually shared facilities used by other tenants in the house rules and regulations of co-living together may include cleaning and maintenance rosters. How is a Rooming House Different from a Shared House? Residents enter into separate agreements to rent individual rooms in the house, and they typically share facilities such as kitchens, bathrooms and laundries. This is different from a conventional share house where tenants jointly rent an entire property under one agreement. Important of understanding the difference between a Rooming House and a Shared House? Understanding the difference between a rooming house and a conventional share house is important because operating a rooming houses are considered a business, and subject to a separate safety and regulatory framework. The Australian National Construction Code (NCC) specifically classifies a rooming house into a Class 1B, instead of Class 1A for a conventional house. In certain cases, a larger rooming house can be Class as Class 3. Each of these class have different requirements and must meet different levels of fire, safety and accessibility requirements: Feature / Requirement Class 1a (Standard House) Class 1b (Small Boarding/Short-Stay) Class 3 (Commercial Accommodation) Primary Type Standard single or attached house Small boarding/guest house or short-stay group Large commercial residential, hostel, or hotel Occupant Limit Standard family/household 12 or fewer people ordinarily No strict low occupant cap (unrelated people) Floor Area Limit None specified 300 m² or less total floor area Exceeds 300 m² (or > 12 people) NCC Code Volume Volume Two (Housing Provisions) Volume Two (Housing Provisions) Volume One (Commercial Buildings) Smoke Alarms Required in corridors outside bedrooms and on each level. Hardwired & interconnected in all bedrooms, corridors, and escape paths. Comprehensive AS 1670.1 system with automated panel and occupant warnings. Evacuation Lighting Not standard (except for some specific multi-level styles). Mandatory emergency/evacuation lighting linked to the smoke alarm system. Commercial-grade emergency lighting and illuminated green Exit Signs. Fire Sprinklers Not required. Not required by default (unless local state variations apply). Mandatory fire sprinklers and/or fire hydrants depending on size/height. Fire Resistance Levels (FRL) Focused on fire separation walls between attached homes. Standard domestic walls; fire-resisting separating walls if layout mimics multi-units. Strict FRL ratings for columns, floors, ceilings, and internal exit pathways. Disability Access Exempt (unless specifically built under Special Disability Accommodation). Required to/within at least 1 bedroom, 1 bathroom, and all common rooms. Full compliance (AS 1428.1) required for main entries, lifts, common zones, and a percentage of rooms. Accessible Facilities No public standard required. Must provide an accessible toilet/shower if it is a commercial boarding build. Mandatory dedicated Unisex Accessible Sanitary Facilities and parking spaces. The above shows the key differences between the 3 building classes, Class 1A, Class 1B and Class 3. For a more complete coverage of what ALL differences are, and how you can meet those requirements, refer to your local council or town planner. As can be seen from the above table, a landlord cannot necessarily convert a four-bedroom investment property into a rooming house simply by installing locks on the bedroom doors and advertising each room separately. Whether a particular arrangement legally constitutes a rooming house depends on its actual operation, not merely what the owner calls it. Source: "Consumer Affairs Victoria — Rooming House Minimum Standards" (https://www.consumer.vic.gov.au/housing/renting/repairs-alterations-safety-and-pets/minimum-standards/rooming-house-minimum-standards) Benefits of Investing in a Rooming House Rooming houses, where four or more individuals rent individual rooms under separate agreements while often sharing communal facilities like a kitchen and laundry, offer distinct advantages for investors Benefits for Investors Higher Rental Yields: Instead of relying on a single rent payment from one family or tenant, investors collect multiple individual streams of rent from each room. Gross yields commonly range between 8% and 12%. Strong, Consistent Demand: In locations where there is high demand for affordable, smaller-scale housing near major job hubs, universities, and hospitals, demand can be consistent. Multiple Sources of Income - Reduced Vacancy Risk: If one room becomes vacant, the property continues to generate income from the remaining occupied rooms, unlike a standard single-lease rental where a vacancy means zero income. Value-Add Potential: Investors can build custom co-living properties or convert and upgrade existing residential buildings to tap into this high-yield market niche. Risks and Disadvantages of Investing in Rooming House While rooming houses offer attractive yields, they function more like operating businesses than passive property investments. We consider them "high-touch investment". The high cash flow comes with elevated risks, intensive management, and strict regulatory oversight. The primary problems and hidden traps of investing in a rooming house include: High Management and Operating Costs High Management Fees: Standard property managers rarely handle rooming houses. Specialized, licensed rooming house operators generally charge around 15% of gross rent due to the high human involvement. Fees of up to 30% are also not unheard of, especially for niche product and locations. All-Inclusive Utility Cost: Because the rooming house operator pays for the electricity, gas, water, and internet, rising energy bills directly erode your profit margins. Tenant's energy usage is often a lot higher than a typical rental house due to this "utilities included" pricing structure. High Turnover: Individual room leases are typically short, from a few weeks to a few months. The frequent moving of tenants means higher advertising costs, continuous tenant screening, and ongoing minor repair bills. Additional Regulatory and Compliance Burdens The "Class 1B" Trap: You cannot simply put locks on a normal residential home's doors and lease it out room-by-room. To be legal, a rooming house must comply with Class 1b Building Code regulations, which require hardwired smoke alarms in every room, emergency hallway lighting, and specific fire doors. The "Class 3" line: Larger rooming houses with more than 300 sqm of floor area falls into a Class 3 classification, requiring more stringent regulatory compliance. For perspective, a 300sqm house is a typical suburban double storey free standing house. Heavy Fines for Non-Compliance: Local councils heavily police illegal rooming houses. Failing to register under the Public Health and Wellbeing Act or using an unlicensed manager can result in fines of $50,184 for individuals or up to 2 years imprisonment or $250,920 for corporations and an immediate 24-hour shutdown. Moving Legislative Goalposts: Compliance standards shift constantly. For instance, recent Victorian laws demand minimum energy-efficiency heating updates by specific future deadlines, forcing landlords to retroactively budget for expensive building modifications. Strict Financing Barriers Higher Deposit Hurdles: Most standard retail banks view rooming houses as commercial loans, not residential mortgages. Thus, you may need a 30% to 40% cash deposit rather than a typical 10% or 20% home loan deposit, if the lender view your investment as a commercial business. Complex Construction Loans: If you are building a purpose-built facility, construction finance is specialized, features fewer willing lenders, and carries higher interest rates that heavily impact your early cash flow. Poor Capital Growth and Resale Limitations Harder to Sell: A rooming house is a specialist product, with multiple independent occupiers on a single property. Narrow Buyer Pool: When it comes time to sell, you usually lose the "owner-occupier" market (ordinary families) completely. Few families want a house with nine small 3m x 3m, 9 sqm individual rooms. Such properties only attract other niche property investors, which drastically reduces demand. Valuation Disadvantage: Despite costing more upfront to build or convert, rooming houses often sell for less than a similarly sized conventional family home because they are treated strictly as an income-producing asset rather than capital growth opportunities. High Tenant Friction Co-living Conflict: Packing 4 to 9 unrelated individuals under one roof naturally results in disputes over cleanliness, noise, and shared kitchen, toilet, laundry, parking space, etc. Managing these tenant interpersonal politics requires a highly proactive approach. We will discuss some of the major negatives later in this article. How to Operate a Rooming House Legally in Victoria? Rooming houses are regulated businesses, not ordinary rental properties As with most things in Australia, a rooming-house investment in Victoria usually involves several separate approvals and obligations. And this is for one good reason: You're providing accommodation, and it involves the residents' health and safety. 1. Operator licensing Rooming-house operators generally must be licensed by the Victorian Business Licensing Authority under the Rooming House Operators Act 2016. The licence relates to the person or business operating the accommodation. 2. Council registration The premises must be registered with the relevant municipal council under the Public Health and Wellbeing Act 2008 and associated prescribed-accommodation regulations. A licensed operator does not automatically mean that every property they operate is properly registered. 3. Planning requirements Depending on the property's location, number of occupants, development characteristics and applicable planning controls, a council planning permit may be required. Council would usually be very interested in noise, car parking, traffic issues that such rooming houses may cause. Investors should obtain written advice from the relevant council before purchasing a property on the assumption that rooming-house use will be permitted. 4. Building classification and compliance Converting an existing dwelling into a rooming house usually require a change of building use or classification, building permits and upgrades to meet applicable building standards. Under the National Construction Code (NCC), some small boarding-house or rooming-house arrangements can fall within Class 1b, while larger facilities may fall within Class 3. Note: Building Class under the NCC: Class 1b generally covers qualifying boarding houses accommodating no more than 12 residents and no more than 300 m²; larger or different configurations may be Class 3. The correct classification depends on the particular building, accommodation arrangements, floor area and occupants. A qualified building surveyor must assess the particular property. Changing of building use and building classifications can materially affect fire safety, exits, alarms, construction and other requirements. 5. Minimum standards and ongoing inspections In Victoria, rooming houses must meet prescribed standards covering privacy, safety, security, heating, sanitation and amenity. Some of these requirements include: Appropriate fire detection, emergency evacuation information and escape arrangements. Minimum sanitary facilities, including toilets, showers and washbasins. Suitable ventilation, natural and artificial lighting. Security and privacy requirements for individual rooms. Fixed heating in residents' rooms under the standards introduced in December 2025. Periodic electrical and gas safety checks. Records demonstrating compliance with applicable minimum standards. From 13 October 2026, operators must also maintain records sufficient to demonstrate that rooms, facilities, services and common areas comply with the prescribed minimum standards. These are not optional upgrades that can be postponed simply because the rental return looks attractive. Sources: "Consumer Affairs Victoria — Operator Checklist" (https://www.consumer.vic.gov.au/licensing-and-registration/rooming-house-operators/running-your-business/checklists-for-rooming-house-operators) and "Minimum Standards" (https://www.consumer.vic.gov.au/housing/renting/repairs-alterations-safety-and-pets/minimum-standards/rooming-house-minimum-standards). Victorian councils are prosecuting illegal rooming houses And of course, there will be many rooming house operators who manage rooming houses without meeting the necessary safety and council requirements. This is not hypothetical. City Councils in Victoria are clamping down on such illegal rooming house and prosecuting the operators. Case study: Illegal Ashwood rooming house — Monash Council prosecution In April 2025, the City of Monash announced a successful prosecution involving an illegally operated rooming house in Ashwood. Two former operators, Michael Nunez and Kim Pham, pleaded guilty to offences involving: Operating an unregistered rooming house. Exceeding the permitted number of occupants in a bedroom. Failing to provide sufficient vermin-proof waste receptacles. The case began following a complaint to council in August 2023. Both were convicted and fined $2,500 each, with one also ordered to pay more than $6,700 in costs. The combined financial consequences exceeded $11,700. Importantly, the prosecution illustrates that councils will investigate complaints, inspect premises and take appropriate enforcement actions. The magistrate emphasised that the legislation exists to protect people who may be particularly vulnerable to poor accommodation conditions. Source: "City of Monash — Council's Successful Prosecution Over Illegal Rooming House, 7 April 2025" (https://www.monash.vic.gov.au/About-Us/News/2025/Council-prosecution-over-illegal-rooming-house). Case study: Melbourne operator charged over alleged unlicensed operation In July 2025, Consumer Affairs Victoria announced charges against the director of a rental-accommodation business and the company itself. The allegations included operating without the required licence and failures relating to rental bonds and condition reports. Consumer Affairs Victoria noted that the accommodation involved international students and workers, some of whom may face additional difficulties understanding and enforcing their rights. These were allegations announced at the time, not findings of guilt. Nevertheless, the case demonstrates that enforcement is not limited to council registration. State regulators can also investigate operator licensing and tenancy-law compliance. Source: "Consumer Affairs Victoria — Melbourne Rooming House Operator Faces Charges, 9 July 2025" (https://www.consumer.vic.gov.au/latest-news/melbourne-rooming-house-operator-faces-charges). How serious are the penalties for operating an illegal Rooming House? Consumer Affairs Victoria states that operating a rooming house without the required licence is a criminal offence. For the 2026–27 financial year, the published maximum penalty for an individual is 240 penalty units, equivalent to approximately $50,184, or up to two years' imprisonment. For a corporation, the maximum fine is 1,200 penalty units, approximately $250,920. These are maximum statutory penalties, not typical fines or automatic outcomes. Source: "Consumer Affairs Victoria — Penalties and Ongoing Legal Obligations" (https://www.consumer.vic.gov.au/licensing-and-registration/rooming-house-operators/penalties-and-ongoing-legal-obligations). The greatest risk isn't necessarily financial: fire safety There is a reason rooming houses face stricter scrutiny. Multiple unrelated residents usually occupy the same building, sometimes with different routines, cooking arrangements, electrical appliances and familiarity with emergency exits. A fire that might be survivable in a properly configured dwelling can become catastrophic when a building is overcrowded, exits are obstructed or fire protection is inadequate. The Brunswick rooming-house fire tragedy On 1 October 2006, two young people died in a fire at an unregistered boarding-house arrangement above a restaurant in Brunswick, Melbourne. The subsequent coronial investigation identified serious safety failures, including problems involving fire separation, smoke detection, escape arrangements and the building's use and classification. The fire originated in the commercial premises below the accommodation. The tragedy exposed the consequences of operating accommodation without ensuring that the building's fire-safety systems and escape arrangements were appropriate for its actual use. It also prompted extensive recommendations concerning registration, building compliance, enforcement and emergency safety. This case should not be taken to mean that properly operated rooming houses are inherently unsafe. Rather, it demonstrates why building classification and fire-safety requirements must be treated seriously. Source: "Coronial findings — Death of Leigh Sarah Sinclair, finding dated 29 June 2009" (https://www.coronerscourt.vic.gov.au/sites/default/files/2018-12/leighsarahsinclair_372706.pdf) For investors, fire safety should never be treated as a discretionary expense to improve the yield calculation. It is a mandatory requirement and expense. The Downsides of Room House. The Hidden Costs of Operating a Rooming House A conventional rental house usually involves one tenancy arrangement covering the entire property. A rooming house may involve five, six or more separate residents, each with individual arrangements, turnover patterns and maintenance requirements. This changes the operating economics. This brings us to the topic of expenses. It is more expensive running a rooming house, than a standard investment property, and here's why: 1. Higher management fees Traditional Melbourne residential property management fees commonly represent a relatively modest percentage of rent, depending on the agency and services. Specialist rooming-house management is generally more labour-intensive. There are more residents to manage, more rent accounts, more inspections, more disputes and more individual letting arrangements. Thus, it can be considered a part-time job. Advertising, bringing potential tenants through, manage the lease agreement, rental bond arrangements, maintaining, inspecting the property, releasing the tenant from the agreement, etc. Many rooming house investors ended up outsourcing the management to a specialist rooming-house operator, who usually charge substantially more than a conventional property manager. Typical fees are around 15%, with higher fees of up to 30% not unheard of, especially in niche, high demand locations, such as summer holiday and seasonal work locations, etc. If you are outsourcing the management of your rooming house, you need to establish exactly what the quoted management percentage includes. Does it cover advertising, resident placement, inspections, after-hours incidents, arrears, cleaning and/or maintenance coordination and compliance administration? Or are these charged separately? 2. High Management Demands and High Tenant Turnover If six rooms are individually rented, each resident can move out independently. Rooming house tenants are usually high turnover tenants. Many are short term tenants ranging from a few weeks to a few months. They lease a room because of temporary business postings, work or study arrangements, etc. Even when overall occupancy remains high, the property may experience several room turnovers each year. Each turnover can involve advertising, inspections, cleaning, condition assessments, administration and periods without rental income. A rooming house advertised as fully occupied is usually not fully occupied throughout the year. 3. Higher utilities, maintenance and shared expenses Many rooming houses advertise rent inclusive of electricity, gas, water and internet. Most tenants would see this as "FREE" utilities and are seldom conscious with need to save energy. Individual rooms are furnished as well, to make the advertised room rent more attractive to tenants. But it transfers room setup and furnishing costs and utility costs exposure to the operator. Six residents using heating, cooling, hot water, laundry and cooking facilities can create a very different cost profile from one conventional household. 4. Greater wear and tear Higher occupancy generally means more intensive use of bathrooms, kitchens, flooring, appliances, doors and communal spaces. The frequency of maintenance is usually higher, even when residents take reasonable care of the premises. Replacement of room furnishing, appliances, repainting, cleaning and repairs should be budgeted rather than treated as unexpected exceptions. 5. Compliance and insurance Appropriate rooming-house insurance may differ from ordinary landlord insurance. Operators also need to allow for periodic safety inspections, regulatory obligations, registration costs and the ongoing maintenance of fire-safety equipment. Insurance premiums can be between 200%-500% (or more) higher than a typical landlord insurance. Investors should obtain written insurance quotations based on the property's actual intended use before committing to a purchase. 6. Specialist resale market A conventional family home appeals to owner-occupiers and investors. But a purpose-built rooming house may appeal primarily to investors seeking specialised accommodation income. Not many homebuyers want to buy a house with 10 sqm rooms, slightly larger than a prison cell, with more luxurious rooming houses, coming with 9 kitchenettes and bathrooms in some or all of the rooms in the house. So, this automatically reduces the pool of buyers. Some buyers may value the rental stream. Others may discount the property because of its layout, operating complexity, financing constraints or the cost of converting it back to conventional residential use. You might be getting a higher rental yield while you are managing it as a rooming house, but this does not automatically translate into stronger capital growth or an easier resale. In fact, rooming house are known to be sold for LESS than a similar sized house, despite the higher capital costs invested into the rooming house conversion. Investment Comparison: Rooming House vs Conventional Rental Let's look at the numbers: Consider two hypothetical Melbourne investments, each with a total acquisition and setup cost of $1.2 million. The rooming house contains six individually rentable bedrooms. The conventional property is leased to one household. These figures are illustrative assumptions, based on market averages, not verified market quotes or actual property transactions. They exclude financing, income tax, depreciation, land tax and capital growth, which would need to be assessed separately for each investor and property. Item Six-room rooming house Conventional rental Total acquisition and setup $1,200,000 $1,200,000 Advertised weekly rent 6 × $350 = $2,100 $850 Potential annual gross rent $109,200 $44,200 Vacancy / turnover allowance $10,920 $1,700 Collected annual rent $98,280 $42,500 Management fees $14,742 $2,550 Utilities and internet $12,000 $0 Cleaning and grounds $6,000 $1,200 Repairs and maintenance $8,000 $3,500 Insurance $4,000 $2,000 Rates and water charges $4,500 $3,500 Compliance and safety allowance $3,000 $500 Net operating income $46,038 $29,250 Gross potential yield 9.10% 3.68% Net operating yield 3.84% 2.44% At first glance, the rooming house generates approximately $65,000 more in potential annual rent. But after allowing for its higher operating costs, the difference in net operating income is approximately $16,788 per year. In this example, the net yield advantage of a rooming house is about 1.4 percentage points better than a conventional rental, rather than the 5.4 percentage-point difference suggested by gross yields in the glossy sales presentations. The 1.4 percentage point better proposition is still an improvement. But it is definitely not the same as receiving a 9% return on the investment, as often illustrated during the "Rooming House Strategy" sales presentation. Investors should challenge the basis of the returns calculation and how it is derived. For most investors who want a simple set-and-forget investment property, a 1.4 percentage point improvement is hardly worth the effort and headaches of managing a rooming house. And this example assumes the $1.2 million rooming-house budget already includes all necessary acquisition, development and compliance expenditure. If additional capital works are required, the effective return will fall further. How Much Occupancy Does a Rooming House Need to Break Even? A typical room house needs occupancy rates of around 80-90%. Ie, for a 9 room house, 7-8 rooms needs to be rented. The next set of calculations illustrates how occupancy rates affect the cash flow of a rooming house. Again, these numbers are based on typical industry averages, as at 2026. Assume the six bedrooms can each achieve $350 per week, with the same underlying management fee (15%) and operating-cost assumptions. Scenario Occupancy Annual rent collected Approx. net operating income Net yield Strong occupancy 95% $103,740 $50,679 4.22% Typical Occupancy 90% $98,280 $46,038 3.84% Weaker occupancy 80% $87,360 $36,756 3.06% The figures assume management fees vary with rent collected while other operating costs remain unchanged. The figures also excludes principal repayments, tax and extraordinary capital expenditures. At 80% occupancy (ie, 7 rooms occupied for a 9 room house), the property may still generate more net rental income than the conventional investment, but notice the yield advantage has narrowed considerably. And if major repairs, compliance upgrades or financing costs are higher than expected, the remaining difference can disappear. At a typical industry occupancy rate of 90%, with very minimal maintenance costs, the yield is actually not much better than a conventional rental property, despite the higher upfront capital costs and higher touch. This is why investors should not evaluate rooming houses using advertised room rents multiplied by 52 weeks, often used in a Rooming House Strategy promotion campaign. The Rooming House capital-cost trap: Buying a house is only the beginning A rooming house usually starts with a typical suburban house. The operator then converts it to meet the rooming house requirements. Now, let's suppose an investor purchases a suitable property for $900,000. They then spend: $200,000 converting or developing the property for compliant rooming-house accommodation. $40,000 on professional fees, permits, inspections, furnishings and contingency. $60,000 on acquisition costs and other establishment expenses. The total investment is now $1.2 million. If the property generates $46,000 in annual net operating income, the net yield is approximately 3.8%. Calculating the return against the original $900,000 purchase price would misleadingly inflate the yield. It is also not correct as without the additional $300,000 in renovations, licensing, furnishing, etc, you would not be getting the returns of a rooming house. Investors must account for the entire capital commitment, including any further expenditure required before the property can legally generate the projected income. They should also consider the opportunity cost of capital tied up during the approval and construction period. What about capital growth for a Rooming House? This is where the investment decision becomes more complicated. For most investors, this is where the numbers break the Rooming House strategy. While a conventional investment house may offer modest rental income but substantial owner-occupier appeal, land value and resale demand, a rooming house, on the other hand, is a specialist, purpose-built rooming house, not a conventional house with 9 rooms. While it may generate more income, it attracts a narrower buyer pool, when you sell. And a smaller buyer pool usually results in a lower selling price. It is common for a rooming house to sell for LESS than a similar sized conventional house, despite the higher upfront capital invested in its conversion. This is particularly possible in markets when its specialised layout limits owner-occupier demand or when investors discount the property for its operating costs and risks. That does not mean rooming houses cannot experience capital growth. A well-located, legally compliant property on valuable land may still perform strongly. But the investment due diligence needs to consider more than rental income. If you come across such properties, always ask one fundamental question: If it is generating good income for the investor, why are they selling this particular rooming house? For example, suppose two $1.2 million properties perform as follows over five years: Five-year illustration Rooming house Conventional house Starting investment $1,200,000 $1,200,000 Assumed annual capital growth 2% 5% Estimated value after five years $1,324,897 $1,531,538 Capital appreciation $124,897 $331,538 Note: These growth rates are hypothetical scenarios (modelled after real cases), not performance forecasts. The conventional house produces approximately $206,600 more capital appreciation in this example. That can outweigh several years of additional rooming-house income. The reverse is also possible if the rooming house experiences a rare, but, stronger capital growth. The point is, in a rooming house, income yield and total capital growth work differently. When can a rooming house make sense? Rooming houses can be legitimate, professionally operated investments providing an important accommodation option. They may be suitable where: There is established, sustainable demand for individual-room accommodation. The property is appropriately located and legally compliant. The operator has relevant experience and management capability. All capital and operating costs have been independently assessed. The investment remains viable under conservative vacancy and expense assumptions. The investor understands the financing, insurance, regulatory and resale risks. A well-run rooming house may outperform a conventional rental property. But that outcome should be demonstrated through a proper feasibility assessment, not assumed from an advertised yield. Questions to ask before buying a rooming-house investment Before committing, an investor should obtain satisfactory answers to these questions: Is the property legally permitted to operate as a rooming house at the proposed occupancy? Is the operator properly licensed, and is the premises registered with council? What planning, building and fire-safety approvals are required? Has a qualified building surveyor confirmed the applicable building classification and compliance requirements? What is the total acquisition, construction, conversion and establishment cost? Are the advertised rental figures supported by comparable operating properties? What management fees and additional charges apply? Who pays electricity, water, internet, cleaning and communal maintenance? What happens financially if one or two rooms remain vacant? What is the exit strategy, and who is likely to buy the property in five or ten years? These questions should be answered before contracts become unconditional, not after settlement. Our Verdict: Higher Rental Income Doesn't Always Mean a Better Investment Product At Concierge Buyers Advocates, we believe investment properties should be assessed on their total risk-adjusted return, rather than a single attractive statistic. An advertised 8–10% rental yield may sound impressive. But investors should establish whether that figure represents gross rent, net operating income, a projected return after development, or a return calculated against only part of the capital invested. They should also consider compliance costs, ongoing management intensity, vacancies, maintenance, financing and resale demand. Once you include the higher overheads, compliance costs, a typical net yield can be as low as 3+%, usually slightly better than a conventional rental house. Depending on your investment goals and risk-taking profile, sometimes, the higher-income property will be the better investment. Sometimes, a straightforward residential investment with a lower rental yield, stronger owner-occupier appeal and lower operating complexity may deliver a better long-term outcome. The best investment isn't necessarily the property collecting the most rent. It's the property delivering the best return for the risks and capital involved. Before purchasing a rooming house or other specialist investment property, obtain independent property, legal, building, tax and financial advice. Thinking of Investing in a Rooming House or Investment Property in Melbourne? A high rental yield doesn't always mean a good investment. What matters is the net return, capital growth potential, risks and long-term performance. At Concierge Buyers Advocates, we look beyond advertised rental yields and property prices. We assess investment fundamentals, location, buyer demand, ongoing costs and potential risks to help you make informed property investment decisions. With over 20 years of property investment experience, we know that sometimes, the best investment decision is knowing what NOT to buy. Considering your next investment property? [Speak with an Independent Melbourne Buyers Advocate →] Disclaimer: This article provides general information, not legal, financial, taxation or investment advice. Victorian legislation, council requirements, building classifications and individual property circumstances should be independently verified before purchase. Numerical examples are illustrative and do not represent guaranteed returns.

Imagine two rental properties in the same suburb. The first is an older house renting for $420 a week. It is structurally sound, electrically safe, weatherproof and free from dangerous mould. The kitchen and bathroom work perfectly well. But it has little insulation, single-glazed windows and limited heating and cooling. The second home rents for $560 a week. It has good insulation, efficient reverse-cycle heating and cooling, better glazing, modern hot water and considerably lower energy consumption. Which home should a renter be allowed to choose? The obvious answer may seem to be: either. But as minimum rental standards continue to expand, there is a broader question worth asking. Should every safe rental property ultimately be required to provide broadly the same minimum level of comfort and energy efficiency? Or could Victoria, and perhaps Australia, consider something different: A rental star-rating system could separate mandatory health and safety standards from comfort and energy-efficiency standards. Every property would first have to pass non-negotiable safety requirements. Safe properties could then be rated from ★ Essential to ★★★★★ Premium according to other criteria, such as insulation, heating, cooling, glazing, energy efficiency and amenities. Renters would see the rating before applying and decide whether the additional comfort was worth the additional rent. This isn't an argument against safe rental housing. Quite the opposite. It starts with one principle that should not be compromised: Health and safety should never be negotiable Whether a rental property receives one star or five stars, certain requirements should always apply. Every rental home should be structurally safe. Electrical installations should be safe. Gas appliances and installations should be safe where gas is present. Smoke alarms and fire-safety requirements should be met. There should be safe water, sanitation and functioning bathroom facilities. Serious building-related mould, damp and water penetration should be addressed. Doors, windows, stairs, balconies and other building elements should not present an unreasonable safety risk. They are fundamental requirements for safe housing, not luxury features. Under the model being proposed here, a property that fails the health-and-safety test would not receive a lower star rating. It simply would not be approved for rental until the health and safety problem was rectified. The star rating would begin only after the property passed that test. Safety is different from comfort Safety vs comfort and amenity is where the discussion becomes more interesting. Safety isn't optional, but levels of comfort and efficiency can vary. Is a house without double glazing unsafe? No. Is a house without ceiling insulation necessarily unsafe? No. Is a bedroom without air-conditioning automatically unsafe? Usually not. Is an older but functional kitchen unsafe simply because it was installed in 1985? Of course not. These features can make a property more comfortable, more energy efficient and cheaper to operate. Those are real benefits. But they are different from electrical hazards, gas leaks, structural failure, dangerous mould or inadequate sanitation. Perhaps our rental regulations should recognise that distinction. Victoria's rental standards are expanding Victoria currently requires rental properties to satisfy mandatory minimum standards across areas including bathrooms, electrical safety, heating, kitchens, mould and damp, structural soundness, ventilation, toilets, locks and window coverings. A fixed heater in the main living area is already compulsory. From 1 March 2027, additional minimum energy-efficiency requirements begin phasing in across heating, cooling, hot water, showerheads, ceiling insulation and draught-proofing. Among the changes, fixed energy-efficient cooling will generally be required when certain new rental agreements commence from March 2027, and from 1 July 2030 the cooling requirement extends to all Victorian rental properties, subject to applicable exemptions. These reforms have stated objectives including improved comfort, lower household energy costs and reduced energy consumption. Those are worthwhile objectives. But there is another question worth examining: At what point does continually increasing the minimum specification of every rental home begin to reduce the supply of lower-cost accommodation? That question probably deserves proper economic analysis rather than an ideological answer. What if rental properties were rated like hotels? Hotels don't all provide the same level of accommodation. A traveller may choose a basic room because price matters most. Someone else may willingly pay considerably more for better facilities, climate control, larger rooms, premium bedding and higher-quality amenities. Could a Rental Star Rating system operate under a similar, but much more carefully regulated system? The Victorian Rental Star Rating System could look like this: Rating Indicative rental standard ★ Essential Safe, functional housing with limited comfort and energy-efficiency features ★★ Basic Basic comfort and some efficiency improvements ★★★ Standard Efficient heating and cooling in the main living area, reasonable insulation and comfort ★★★★ Enhanced Good insulation, efficient heating and cooling through most of the home, improved energy performance ★★★★★ Premium Excellent thermal performance, highly efficient whole-home climate control and very low operating costs The stars would not rate the suburb, school zone, size of the land or prestige of the address. Those things already influence market rent. The rating system answers a much narrower question: What level of accommodation, thermal comfort and energy efficiency does this particular home provide? What would a one-star rental actually mean? A one-star rental property should not mean an unsafe home. It should meet the basic health and safety requirements. But it may not have the heating and cooling or energy efficiency of a modern home. Consider an older but well-maintained house. It might have: no ceiling insulation no air-conditioning no fixed heating single-glazed windows an older kitchen an older bathroom limited energy efficiency. Yet it could still be: structurally sound weatherproof electrically safe gas-safe where applicable equipped with compliant smoke alarms free from serious mould and damp secure sanitary supplied with working hot water, toilet, shower and cooking facilities. This is where the idea will understandably attract the most debate. Under a rental-rating model, that could be an: ★ Essential Rental Its advertisement might clearly state: Rental Quality Rating: ★☆☆☆☆ Health & Safety Assessment: PASS Ceiling insulation: None Fixed heating: None Fixed cooling: None Double glazing: No Energy efficiency: Low Approved portable electric heating/cooling: Permitted It is basic accommodation: safe and functional, but with limited comfort and energy-efficiency features. There should be no fine print and no attempt to disguise the property's limitations. The renter should know exactly what they are considering before they even inspect it. Why would anyone choose a one-star rental? Because people have different circumstances. Consider two otherwise comparable properties. Property A Rent: $420 per week Rating: ★ Essential Limited insulation. No fixed cooling. Higher expected energy consumption. Property B Rent: $540 per week Rating: ★★★★ Enhanced Good insulation. Reverse-cycle heating and cooling. Better glazing. Efficient hot water. Property B is clearly the superior home from a comfort and energy-efficiency perspective. But it costs another $120 per week. That's $6,240 per year in additional rent. One household might happily pay the difference. Another might decide that paying roughly $520 more each month in rent is not worth the additional comfort and potential energy savings, and consciously accept higher energy use and lower thermal comfort in exchange for saving more than $6,200 a year in rent. A university student may make one decision. A household with young children may make another. A pensioner may have different priorities again. Someone who spends half the year overseas may value heating and cooling very differently from somebody who works from home five days a week. It is not a one-size-fits-all situation. There isn't necessarily one correct answer for all of them. But isn't a poorly insulated home more expensive to run? Potentially, yes. And this is one of the strongest arguments in favour of higher energy-efficiency standards. A cheaper rental isn't necessarily cheaper when household energy costs are included. That is why a proper star-rating system should disclose more than just stars. A rental advertisement could eventually show something like: Rent: $420 per week Rental Quality: ★★☆☆☆ Estimated energy performance: Poor compared with: Rent: $470 per week Rental Quality: ★★★★☆ Estimated energy performance: Very Good This would allow renters to consider total occupancy cost, not merely weekly rent. The purpose of disclosure should be to provide better information, not to pretend that low-efficiency housing has no disadvantages. Would one-star housing create a lower class of rental accommodation? That's another legitimate concern. If inexpensive one-star rentals were concentrated in lower-income suburbs, critics could argue that lower-income households would disproportionately live in less comfortable and less efficient housing. But there is another side to that issue. Many Australian inner-city suburbs already contain large numbers of older homes with modest energy efficiency performance. Some are rental properties. Many others are owner-occupied. People live in those homes today, every day. And many more renters actively value them, because of their location and comparatively lower rent. They aren't necessarily unsafe. Some could ultimately leave the rental market if they fail to meet new requirements and the owner is unwilling or unable to undertake the necessary upgrades. They are simply older housing stock. And older, less highly specified housing has historically played an important role in providing lower-cost accommodation. If every older property must progressively be upgraded towards a significantly higher specification before it can legally be rented, some owners may upgrade. Others may sell. Some may redevelop. Others may decide that continuing to provide the property as a rental is no longer worthwhile. There could ultimately be a negative effect on rental supply and, in turn, rents. As supply shrinks, rents will go up, if demand does not reduce. The outcome isn't necessarily straightforward. This issue needs independent economic modelling. A safe old home does not automatically become unsafe when a new renter moves in There is an interesting consistency question here. Imagine a 1970s Melbourne brick-veneer house. Its owner has lived there happily for 25 years. It has single glazing. Its insulation is basic. There is one old heater. There is no air-conditioning. The owner sells it to another owner-occupier. Nobody argues the house should suddenly be prohibited from occupation solely because its thermal performance is mediocre. But if that same house becomes a rental property, it may be required to undergo upgrades that an owner-occupier living in the identical home is not required to undertake, depending on which rental standards and transition provisions apply. There may be good policy reasons for treating rental housing differently. Renters generally cannot make substantial alterations to someone else's building, while owner-occupiers can choose whether to improve their own home. But it is still worth asking: Which features genuinely belong to an absolute habitability standard, and which features are better treated as differences in accommodation quality? A possible five-star framework to address increasingly high standards A more developed system could separate rental regulation into two layers. A Health and Safety layer and a Rental Quality Rating layer. Layer 1: Mandatory Health & Safety Every property must pass this basic level. Health and safety requirements should never be negotiable. This could cover: structural integrity electrical safety gas safety smoke and fire safety serious mould and damp weatherproofing sanitary bathroom and toilet facilities potable water functioning hot water safe cooking facilities safe ventilation Failure = cannot rent. No renter should be able to waive these requirements. Layer 2: Rental Quality Rating Once the property passes the tests in the first layer it is rated on more comfort, amenity and features such as: ceiling insulation wall and floor insulation glazing draught sealing heating cooling heating and cooling to bedrooms hot-water efficiency solar window coverings kitchen amenity bathroom amenity ventilation overall condition predicted energy performance. This rating then produces the ★ to ★★★★★ rating. Landlords shouldn't be allowed to deliberately downgrade homes Any rating system would also need anti-gaming rules. Imagine a property currently has three perfectly good reverse-cycle air-conditioners. A landlord shouldn't be able to remove them simply to turn the property into a cheaper one-star rental. Similarly, if a property was leased with heating, cooling, an oven or another functioning appliance, a lower star rating should not remove the landlord's responsibility to maintain the facilities actually provided under the tenancy. The objective should be to preserve the standard of the property as initially leased, not create an incentive for landlords to strip functional amenities from better homes. Rent controls shouldn't be attached to the stars Much like the hotel star rating system, the star rating system should not determine prescribed rents according to ratings. Market forces should be allowed to function. For example: ★ properties may charge $400. ★★★ properties may charge $550. ★★★★★ properties may charge $750. Rent should be determined by market forces, not government legislation. If the market determines there is a 50% premium for a 5-star 4 bedroom house in Glen Waverley, so be it. The same market force in a different suburb may also determine the 5-star property is not worth more than 20% premium. Similarly, the 5-star house in a regional town where residents are happy with a 2-star property, it will not command the same premium regardless of their thermal performance. Location, land, bedroom count, transport, schools, condition and local supply and demand all affect rental price. The star system should therefore provide information, not determine the rent. Let market forces determine the rents. Different locations may also reveal very different willingness to pay for higher-rated accommodation. In some markets, renters may place a substantial premium on five-star comfort and efficiency. In others, affordability may matter more and the rental premium for additional stars may be relatively small. The market data would eventually tell us, and accommodation providers can tailor their product to meet the needs of the market. Over time, the rental market would reveal how much renters are prepared to pay for additional comfort and efficiency. That information itself could become valuable. Imagine being able to see: Median three-bedroom ★★ rental: $510/week Median three-bedroom ★★★ rental: $545/week Median three-bedroom ★★★★ rental: $595/week Renters could make better comparisons. Owners could then decide whether spending the $15,000 to upgrade from ★★ to ★★★★ would produce an economic return. And policymakers could determine the demand for the types of rental properties in different locations, and measure whether efficiency improvements genuinely translate into lower total household costs. Isn't it simpler to continue raising minimum standards? That remains a legitimate policy option. There are strong arguments for it. Better insulation and efficient heating and cooling can improve comfort. Energy-efficient homes can reduce energy consumption. Renters often cannot justify investing substantial amounts of money upgrading homes they don't own. Mandatory standards can solve that split-incentive problem. But mandatory standards have costs as well. Someone ultimately pays for insulation, heating systems, cooling systems, hot-water upgrades and other improvements. It is usually the property owner absorbing the costs, but some of the cost may ultimately be reflected in higher rents. Some owners may instead sell, reducing rental properties available for rent and potentially placing further pressure on supply. The overall consequences depend on housing supply, vacancy rates, upgrade costs, tenant demand and many other variables. In a market already experiencing tight rental supply and high property holding costs, additional compliance costs may place upward pressure on rents or affect an owner's decision to remain in the rental market. The size of that effect should be independently measured rather than assumed. Perhaps the question isn't “meet standards or do not meet standards” That is probably the wrong debate. The better question might be: Which standards should be absolutely compulsory, and which should be transparently rated? Electrical safety? Compulsory. Fire safety? Compulsory. Structural safety? Compulsory. Serious mould and damp? Compulsory. Safe sanitation? Compulsory. Air-conditioning in every bedroom? Perhaps that belongs in the rating. Double glazing? Perhaps rating. R5 ceiling insulation? Perhaps rating. Solar panels? Rating. Whole-home reverse-cycle climate control? Almost certainly rating. There is still consultation needed to decide exactly where that line should sit. What about existing energy-rating systems? Australia does not necessarily need to start from nothing. Existing home-energy assessment frameworks can measure aspects of thermal and energy performance. A future rental-quality rating could potentially incorporate recognised energy-performance assessments while adding other rental-specific factors such as heating and cooling coverage, amenities and property condition. The objective should not be another expensive bureaucracy simply for the sake of creating one. The rating should be easy for renters to understand, practical for owners to obtain and sufficiently consistent that two similar homes receive broadly comparable assessments. What would success look like? A successful system wouldn't necessarily mean every Victorian rental eventually becomes five stars. That may actually defeat the purpose. A healthy rental housing market could contain different products for different households. It should allow investors and property owners to offer lower-cost rental properties, if the renters prefer them. Such a market could contain: ★ affordable basic housing. ★★ functional older housing. ★★★ mainstream comfortable accommodation. ★★★★ highly efficient housing. ★★★★★ premium accommodation. What matters is that every rental property is safe. The renter then has meaningful information about what is being offered and how much it costs. Could the Victorian Rental Star Rating System Improve Housing Affordability? Possibly. But it needs testing. A rental-rating model could preserve older, lower-cost accommodation that might otherwise require significant capital expenditure before it could continue being rented. It could allow property owners to continue to lease these more basic properties at a lower price. It could also encourage owners to voluntarily upgrade because higher ratings may command stronger rents, lower vacancy or better tenant demand. Those competing effects should be modelled rather than assumed. A sensible next step could therefore be a pilot program comparing: actual rents energy consumption tenant satisfaction vacancy periods maintenance costs upgrade costs landlord investment behaviour total renter housing costs. That evidence would tell us far more than slogans from either side of the rental debate. The proposal in one sentence Perhaps the principle is this: Every renter should have the right to safe housing. But adults could also have the right to knowingly choose between safe basic accommodation and more expensive housing offering greater comfort, amenities and energy efficiency. That doesn't mean the rental standards are obsolete. It requires deciding which standards genuinely protect health and safety and which standards describe the quality of the accommodation being purchased. A transparent star-rating system may offer one way to do that. It may not be the final answer. But with housing affordability becoming increasingly difficult for many Australians, the question deserves serious discussion. What do you think? Would you knowingly rent a safe, properly disclosed ★ or ★★ property if it saved you $80, $100 or $150 per week? Or do you believe heating, cooling, insulation and other efficiency standards should continue becoming universal minimum requirements regardless of rental price? And where would you draw the line between essential safety and optional comfort? I'd particularly like to hear from renters, rental providers, property managers, builders, energy-efficiency professionals, housing researchers and consumer advocates. A better rental system should ultimately be judged by whether it produces safe homes, sufficient housing supply, genuine consumer choice and housing people can afford. FAQ Are one-star rentals currently legal in Victoria? No such rating currently exists under Victorian rental law. Victorian rental properties must comply with the applicable statutory minimum standards. The one-to-five-star framework described here is a policy proposal for discussion. Would a one-star rental be allowed to have unsafe wiring or dangerous mould? No. Under the proposed model, health and safety requirements are not optional and would apply equally to every rental property. A property failing those requirements would not be eligible to rent, regardless of its star rating. Would landlords be able to charge more for higher-rated properties? The proposal would not set rents according to star ratings. Market rents would continue to reflect location, property size, condition, supply, demand and amenities. The rating would provide additional information about the quality and efficiency of the accommodation, allowing renters to decide whether any premium is worth paying. Would renters be forced to accept one-star properties? No. The premise is informed choice. The property's rating and material shortcomings would need to be disclosed before a renter applies or enters into an agreement. Are Victoria's rental energy-efficiency standards changing? Yes. New minimum energy-efficiency standards covering heating, cooling, hot water, showerheads, ceiling insulation and draughtproofing begin phasing in from 1 March 2027. Does Victoria currently require heating in rental properties? Yes. Victorian rental properties currently require a fixed heater in good working order in the main living area, subject to the applicable minimum-standard rules. This article discusses a possible alternative policy framework. It does not describe current Victorian rental law. Rental providers and renters should refer to Consumer Affairs Victoria for current minimum rental standards and compliance requirements. Current Victorian rental-standard information checked: 27 October 2026. About the author Rayson L. is Director and Buyers Advocate at Concierge Buyers Advocates in Melbourne. He works with home buyers, property investors and renters across the Victorian property market and writes about property acquisition, housing policy and market trends.

With over 25 years in the real estate investment industry and corporate world, Raymondson is the founder of this independent buyer agency service in Melbourne. He personally hand-picks his team of buyer's agents and buyer advocates, to help clients navigate the property market and make informed decisions. What sets him apart from others in the industry is his unique background and expertise in data management and analytics. Starting from Scratch, as a Migrant​ As a migrant to Australia, Raymondson arrived with nothing but two suitcases and a pile of debts. After a failed property investment in his home country, he took a loan from his lender, jumped on a plane from Singapore, and landed in Melbourne to start a new life. His first job in information technology, launched his data and analytics career. With his interest and knowledge in data management and analytics, he built his own proprietary property analytics database, which he uses to analyze the Melbourne property market. Data Don't Lie. Or do they? Everyone knows data don't lie. But did you know it is the narratives around the data that lies? About 80% of the population does not know how to read data. Yes, it is a bunch of numbers, but what do they numbers mean, how do different sets of numbers co-relate? And what do they suggest? Spruikers know most people do not understand data. Thus, many spruikers are using "carefully selected pieces of data" to help spruik their sales and marketing campaigns. Independence is GOLD And this is why Raymondson likes being independent. He loved the freedom to tell it like it is. He has no bosses or no master franchise to tell him what to do. He has no hidden agenda, has nothing to sell, and just want to run an honest Buyers Advocacy business. ​ He discovered that the Melbourne property market is predictable when the data is overlaid with the right insights from the ground. With this knowledge, he started his property investment journey by using the data he collected over the years, to trade and flip properties. In two years, he paid off his debts and started building his property portfolio, accumulating his wealth, and eventually achieving financial freedom. Staying independent as a boutique buyers advocacy isn't easy either. Larger players in the bueyrs advocacy industry are ready to discredit smaller boutique players, while strutting out their own marketing junk. Meanwhile sales agencies are ready to attract Raymondson into their team to help with the sales and marketing. Stuffs that he does not really enjoy. And he knows that. The only way he can be really independent and free from any corporate sales agendas is to be independent. And the constant stream of high value envestors who understand the value of independence are his key supporters. ​ What's life being "Retired"? Despite his achievements, Raymondson is a low-key, low-profile person who doesn't flaunt his "retired" status. He prefers to stay under the radar and usually turns down media interviews. He does not believe in mass media, as it often goes against his principle of providing honest property buying news. Most mass media has an agenda to drive. Their purpose is to sensationalise the news. The details are often selected to excite the readers. This goes against his integrity. His value of honesty and trust. Raymondson understands what it's like to be in debt, having taken a misstep in property investing himself. He is therefore passionate about helping buyers avoid the pitfalls and that made him start this buyer advocacy agency, with the aim of helping home buyers and property investors navigate the market and avoid the troubles and stress of home and investment property buying. ​ What are the values of Concierge Buyers Advocates? At Concierge Buyers Advocates, Raymondson and his team provide an exclusive but affordable property buyer agency service built on trust, integrity, exclusivity, and helping their exclusive clients buy and own properties quickly and confidently. They do not sell, and they have no targets to meet. They're only accountable to their clients, not their shareholders or franchisors. With their expertise in data analytics, they provide honest answers and help clients outsmart the property market while avoiding inflated pricing. ​ Raymondson is a straight-talking person who tells it like it is. Sometimes, this means going against mass consensus, including his views on the Melbourne property market. Clients who love honest answers and hate fluff appreciate his work. He's been right with forecasting the rise in property prices after the 2019 Federal Elections[here], and he's been right with predicting that property prices are not going to crash due to the COVID-19 pandemic [early 2020] [mid 2020]. He has also been right with predicting that economies have to open up eventually, with or without COVID-19. Talk about COVID-normal and living with COVID; you can only get honest feedback from him. ​ Raymondson is a man with a vision and passion to help others achieve financial freedom through smart property investments. His unique background and expertise in data management and analytics allow him to provide honest answers and help clients navigate the complex property market with ease. If you're looking for an affordable and exclusive property buyer agency service that's built on trust and integrity, look no further than Concierge Buyers Advocates.

Using data for real estate investment can be powerful, but it comes with certain risks, especially if you are relying only on data, without a good understanding of the location. Here is why. Updated: 26 October 2026 Key risks to consider before using data for property investment Before using or trusting a data source for property investment, you will need to understand these risks. 1. Over-Reliance on Historical Data Real estate data often relies on past trends, which can be misleading if the market shifts. For instance, a neighbourhood that’s appreciated steadily in the past might see slower growth or even decline if economic, social or tax conditions change. 2. Ignoring Local Nuances Data might show promising numbers on a broad scale but fail to capture local nuances such as neighbourhood dynamics, nearby developments, or community reputation. Overlooking these qualitative aspects can lead to investments that look good on paper but underperform in reality. 3. Data Quality and Source Reliability The accuracy of predictions depends heavily on the quality of data sources. If data is outdated, incomplete, or inaccurate, your investment decisions may be compromised. Using unreliable sources or poorly analysed data can lead to misguided investments. 4. Market Volatility and External Factors Economic factors like inflation, interest rates, or unexpected events (e.g., a pandemic) can disrupt real estate trends and invalidate data-based projections. Data cannot always predict external economic shocks that could impact property values. 5. Overfitting and Misinterpreting Data There’s a risk of overfitting models, where algorithms are too closely tailored to historical data, losing predictive power. Misinterpreting correlation as causation, or relying solely on single data points without considering broader context, can also lead to poor investment decisions. 6. Lagging Indicators Many real estate indicators lag behind real-time market shifts. This means by the time data is available and analysed, the opportunity could have shifted, and investors may miss the optimal time to buy or sell. From our observations, while some datasets can up up to a year old before they become meaningful and usable, some (eg, population demographics from the ABS census) can be up to 6-7 years old - yes, it takes ABS 1 to 2 years to cleanse, transform and interpret the data before they are released.. The recent Budget 2026 tax changes changed the market overnight, but monthly price shifts only started showing in data 2 months later. Nearly six months later, in October 2026, the effect is still not fully reflected in property data. While the effects are felt almost instantly, it will take another 6 to 12 months for the impact to be fully analysable. 7. Privacy and Ethical Concerns The use of personal data, such as population demographic or income and salary information, raises privacy and ethical considerations. Mishandling or improper use of this data can often lead to legal repercussions and damage reputation. 8. Bias in Data Sources Algorithms trained on biased or incomplete datasets may provide skewed results, which often mislead investors. For example, data showing demand in high-income areas might ignore upcoming growth in emerging neighbourhoods, missing out on high-potential investments. 9. Risks of Analysis Paralysis Analysis Paralysis is a term used when the user of data gets too fixated with data, resulting in the user trying to find the unicorn property and location where every single metric is perfect. In the real world of real estate investing, nothing is perfect. Understanding the metric is critical before you can pick the right balance based on your individual priorities. We wished we could, but we cannot always have our cake and eat it. 26 October 2026 update: Case Study: The 2026 Budget Changes and Their Effect on the Data 2026 has been an interesting year. About 18 months after this article was first published, major changes to negative gearing and capital gains tax (CGT) were announced in the 2026 Federal Budget on 12 May. The investment property market reacted almost immediately. That sudden shift also provided a useful case study for this article, illustrating the concept of data lag and the risks of relying solely on data analytics when buying property. Up until early May 2026, property buyers relying solely on data analytics would have continued buying in hot locations such as Perth, Brisbane and Townsville. They would have expected these markets to keep rising, as the data showed prices trending upwards and suggested there was still sufficient demand to sustain high growth. This was despite talk of negative gearing and CGT changes being “leaked” to the property investor market. When we shifted our focus from hyped markets to market fundamentals, we were ridiculed by optimistic, euphoric investors riding high on paper gains and expectations. Two months later, in July 2026, prices started tumbling across the board, including in the supposedly infallible markets of Perth, Brisbane and Townsville. Some suburbs recorded falls of between 3% and 10%. Many investors hoping to get out of these markets found themselves stuck, dealing with demand that had disappeared almost instantly, increased stock levels and longer days on market. How Did the 2026 Budget Affect the Market on the Ground? The impact of the 2026 Budget was felt almost immediately on the ground. In Melbourne, auction after auction ended in a property being passed in, as vendor expectations no longer matched what buyers in the shocked market were prepared to pay. The first weekend after the announcement presented some very good purchasing opportunities. A few $1.2–$1.4 million properties in and around Wheelers Hill sold for under $1 million, something unheard of in recent years. These conditions continued for another two to three weeks while investors sought urgent advice from their accountants and financial advisers. In the Melbourne locations we were monitoring, prices began a slow recovery in June 2026, about a month after the announcement. By September, prices in the blue-chip and popular locations we were following had stabilised as buyers started trickling back into the market. How Was the Impact of the 2026 Budget Reflected in the Data? When it comes to data analytics, the first week’s figures after a crash would often be treated as an outlier. You need a second or third data point before a trend starts to emerge. Now, because sales data are not consolidated and reflected in reports until the end of the month, IT systems and data analysis reports would not start reporting the trend until at least two month-ends later, in this case, July 2026. Some data sources such as Cotality started reporting a slight 0.6% fall in May 2026, before the budget, as rising interest rates starts biting and buyers start holding off investment until the Budget night. 20 days after budget night, a 0.8% fall was recorded for Melbourne. However, since Melbourne market has been hovering horizontally since the pandemic, most data analysts would dismiss this as a "normal" fluctuation. The trend only started showing two months later, and made the report available to investors, in July or August 2026. By then, investors relying solely on those reports had already missed the bottom in Melbourne, where prices had already started recovering. Nothing beats first-hand experience on the ground. How to Mitigate The Risks of Relying on Data for Property Investment Use a combination of quantitative data and qualitative insights from experienced real estate buyers agents. Diversify data sources. Understand the data definition and cross-check the reliability of each one. Stay aware of market trends and potential economic shifts. Consult with local experts, such as buyers' agents, who have on-the-ground first hand insights that data alone do not capture. While data is essential for modern real estate investment, it must be approached with care and balanced with practical insights and local knowledge. Article written by our in-house data scientist Rayson, who is also our Principal Buyer's Advocates.

If you think you can rely only on Data Analytics for property investment, think again. The revelations in this article will surprise you. And it doesn't matter what data experts tell you. You CANNOT fully rely on data analytics for property investments. And not all data are the same, even if they have the same name. You need to understand the data dictionary, data taxonomy, data currency, before you determine how you should use the data. In today's fast-paced world of property investment, data analytics has emerged as a game-changer. With access to vast amounts of information at your fingertips, investors are better equipped than ever to make informed decisions. But the question remains: Can we rely on data analytics alone when making crucial property investment choices? Now, Rayson, founder of Concierge Buyers Advocates in Melbourne, will explain how data analytics is reshaping the property investment market and how investors should use it with the right advice and on the ground insights. Who is Rayson? Rayson founded Concierge Buyers Advocates, a premier and well regarded, award winning boutique buyers agency in Melbourne, helping property buyers and investors outsmart the property market, and buy smart and fast. Rayson's experience in Data Analytics and Data Management is unquestionable. Back in the 90s, Rayson played a key role in setting up a Data Analytics and Data Mining platform at one of the leading telecommunications providers in the world. Rayson recognised the power of data, data analytics and how data can tell a story and trend when combined with the right context and knowledge from the ground. That got Rayson hooked on Data Analytics and Data Science. Since then, Rayson has been involved in various data analytics and data management projects and consultant roles in the corporate world in the Asia Pacific and Australasian regions. As a 20+ year property investor veteran with over 30 years of experience as a data practitioner, Rayson shares his insights and thoughts on Data Analytics and its role in Property Investment. Rayson will also be sharing his concerns with entrusting your investment decision solely based on data, without understanding the context, data definition, data source and data lineage. The Power of Data Analytics in Property Investment Data analytics is transforming the way investors approach the property market. It provides valuable insights into trends, helping you stay ahead of the curve and make smarter decisions. From tracking property prices over time to identifying high-growth suburbs, data gives you an edge in the competitive Melbourne market. Some of the key insights we can extract with data analytics include: Market Trends: Data allows you to see the bigger picture, identifying trends and forecasting growth in specific areas. Rental Yields: By analyzing rental yields, you can identify suburbs offering the best return on investment. Vacancy Rates Data: Data can highlight potential red flags, such as high vacancy rates, helping you avoid costly mistakes. Demographic Data: Understanding the demographic trends of an area, including population growth and employment rates, can help you target your investments more effectively. The beauty of data analytics is that it removes much of the guesswork from property investment. Instead of relying on gut feelings, you’re armed with reliable information that guides your decisions. Benefits of Using Data Analytics in Melbourne's Property Market Accurate Predictions: In the ever-changing Melbourne property market, data analytics helps you predict which suburbs are likely to see capital growth and where rental demand is highest. But there is a catch. And it is something which real estate agents who spruik and claim to use data analytics don't want you to know. Minimizing Risk: Data-driven insights allow you to avoid risky investments by highlighting areas with declining values, poor rental demand, or unsustainable growth. Speed and Efficiency: Data analytics streamlines your decision-making process, helping you act quickly in Melbourne’s competitive property market. Tailored Investment Strategies: Using data analytics, you can customize your property investment strategy to meet your specific goals—whether you’re looking for high-yield investments, capital growth, or positive cash flow properties or property renovation and flip opportunities. The Limits of Data: Why You Still Need a Good Knowledge from the Ground While data analytics is a powerful tool, relying on it exclusively can be limiting. Why? Because real estate is about more than just numbers. The Melbourne property market is diverse and nuanced, and navigating it successfully requires a deep understanding of local trends, neighborhoods, and market sentiment—things that data alone cannot always capture. Here’s why, even with perfect data, expert guidance from a buyers advocate in Melbourne is invaluable: Local Knowledge: Data might show you the numbers, but a good understanding of the local area is still critical as it gives you first hand knowledge of the streets. They let you understand the subtle differences between suburbs, pockets, streets, the reputation of local schools, the upcoming infrastructure projects, and other factors that aren’t always visible in data reports. There is also an important shortcoming of relying solely on Data Analytics, which we will cover later. Off-market Opportunities: Many of the best properties in Melbourne never hit public listings, and thus not found by data. Buyers advocates have access to these off-market properties, giving you the chance to buy in prime locations without competing with the masses. Negotiation Power: Data can tell you what a property is worth, but it does not negotiate on your behalf. A Melbourne buyers advocate uses their expertise to secure the best possible price, ensuring you do not overpay. Risk Management: Property transactions are complex. From experience, about 80% of property purchases comes with unexpected hurdles. Having a buyers advocate by your side ensures you have a professional managing the process, helping you avoid costly mistakes. Why do you need a Buyers Advocates, when you have access to the data? Combining Data with Local Expertise for Smart Property Investments The true magic happens when you combine the precision of data analytics with the expertise of a Melbourne buyers advocate. Think of Data Analytics as your GPS navigator. It shows you how to get there, and you still need the experience, the local knowledge to drive, ensuring you reach your destination safely, avoiding potholes, and other unexpected dangers. Data can point you in the right direction, and your experienced local buyers advocate ensures you reach your destination smoothly and safely. At Concierge Buyers Advocates, we leverage cutting-edge data analytics and pair it with our 20+ years of experience in the Melbourne property market. This powerful combination gives you the confidence to make the right moves, whether you’re buying your first home or building a property portfolio. Important Data Collection Processes You Need to Know, before you trust any data In today’s property market, data analytics plays a key role in shaping successful investment strategies. However, to rely on data for property decisions, it's crucial to understand the key data collection processes and their limitations. Data Event: Data events are events which happened, which results in data being generated and collected. Every transaction leaves behind a digital footprint that is collected for analysis. Examples are a property purchase event, change of ownership, commencing of rental, property being publicly listed in the sales or rental listings. Data Standardisation: Before data can be used, it goes through a set of processes which collates the data, cleanse, and standardise them according to a specific data rules and formatting, defined in the data dictionary. Examples, ensure postal codes and addresses, what determines a sale or change of ownership, or days on market, demographics. Data Currency in the World of Australian Real Estate Data In the world of Australian real estate data, data currency is critical but often overlooked, especially in a rapidly changing market. Data lag, data latency, and data currency each play a vital role in determining how reliable and how actionable the real estate insights are for property investors. Data Lag is the time it takes for data to be gathered, processed, and standardized so it can be used for meaningful analysis. For example, sales transactions may only appear in official records months after they happen, meaning insights drawn from this data may be delayed by weeks or even months. Data Latency represents the time delay between when data is ready for use and when it yields actionable results. For investors, this latency can mean missed opportunities, as early indicators of market shifts may be obscured by delayed processing and distribution. Currency of Data refers to how up-to-date and relevant the data is for answering specific questions, such as identifying emerging market trends. In Australian real estate, much of the data accessible to investors is already several weeks old by the time it becomes available, and many decisions still rely on data that is months or even years out of date. For instance, socio-economic insights, income statistics, and population figures are often drawn from Australian Bureau of Statistics (ABS) Census data. Given that the census occurs only every five years and can take another one to two years to cleanse, process, and release, this data often reflects a reality that may be up to seven years late. And demand data, such as sales volume, sales price, vacancy rates, can take up to 3-6 months before it shows up as actionable information. Two months to show a movement, and a further two sets of data to show a trend. For data-driven real estate investors, understanding the limitations posed by these time lags is crucial. Recognizing where data may not reflect current market conditions and supplementing with real-time insights from on-the-ground sources, such as local agents and up-to-date market reports, can help bridge the gap between historical data and present-day realities. Relying on data without the complete understanding of the source, credibility, syntax, data, etc, is like self medicating when you have no idea what you are doing. And blindly trusting data from property investment spruikers can often lead to very bad outcomes. Why Data Alone Isn't Enough While data provides powerful insights, relying solely on it has its limitations. Delays in data collection and processing mean that by the time trends appear in the data, the opportunity may have already passed. For example, savvy investor would usually have started searching and buying in hot spots, 12 months before it shows up in the data, leaving investors scrambling to catch up. And there are usually no other data which could have suggested a hot spot, without violating serious data privacy laws. Data also doesn't account for human factors like emotion, buyer sentiment, or unexpected events like economic shifts or regulatory changes. While data gives you the "what," it doesn’t always explain the "why" behind market movements. There are also risks of relying on data when you do not have a complete understanding of the underlying data. By "data", we mean data dictionary, taxonomy, currency, lifecycle, etc. These delves into hard core data management, governance and analytics concepts, and we may discuss that a later article. In short, even for a data scientist, without an understanding of the underlying data, is unable to accurately interpret it, not to mention the majority of property investors who have no basic understanding of data. Real-World Example: Data Lag in Property Sales Let’s consider a property sale in Melbourne. A buyer may have been searching for a home for several months before closing the deal. The sales event is recorded, but it could take two months for the property to settle and then another month before the data is collected and available. By the time this information hits the analytics platforms, a total of three months could have passed, meaning you’re looking at past events rather than current trends. Furthermore, buyers may have shown interest in the area months earlier, a fact that won't be reflected in the data until it’s far too late to act. The early momentum of interest is where the real opportunities lie, and unfortunately, the analytics won’t show it in time for you to make a timely move. Beware of Data Manipulation It’s not uncommon for sales agents to use manipulated data to back up their claims. Numbers, while objective, can be framed to suit a sales narrative. Property investors should be cautious of “facts” presented in marketing materials or investment seminars that claim unrealistic growth rates, often focusing on selective data points. For example, claims of “10% annual growth” in Melbourne’s apartment market may sound appealing. But in reality, while growth of 10% are usually expected for properties with significant land in metropolitan Melbourne, Melbourne apartment prices have been stagnant for years. In fact, if you were to buy new apartments, it is usually normal that you can expect to lose 10-20% of the value if you sell in the first 10 years. Again, you should not blindly trust data, without understanding the source, credibility, syntax, currency, etc. Doing so can often lead to very bad outcomes, especially if a property investment spruiker claims to have selected BOOM locations based on their data. Do More Data Mean More Accurate Results? While boasting “30-50+ metrics” may look impressive, not all data points are relevant to every buyer’s specific needs or goals. Using data without fully understanding its source and context can mislead property buyers. And this is often the tactic used by property spruikers to bait unsuspecting buyers and investors. For instance, vacancy rates might not matter for a homebuyer focused on proximity to their workplace. On the flip side, sales agents often avoid discussing the high vacancy rates of new apartment blocks or new estates when they are selling investment properties to property investors. Vacancy rates in these areas can often range from 3% to 10%. Similarly, while "days on market" might help negotiate a lower price, it won’t matter to an investor who’s already found a high-yield property. And the sales agent trying to get your listing or sale will be very hesitant to mention how long it takes to sell the property. Smart property investment or buying decisions are not about having more data but understanding which data matters most for your unique situation. Quality over quantity, every time. At Concierge Buyers Advocates, we have access to over 100 data metrics, but we focus on the data that’s relevant to your personal or property investment goals. Our job is to cut through the noise and provide you with actionable insights, ensuring that you make informed, confident decisions in the fast-paced Melbourne, Victoria and Australian property market. Get the Full Picture with Expert Guidance For a successful property investment strategy, data analytics is just one piece of the puzzle. To truly outsmart the market, you need a holistic approach that includes expert insights, local market knowledge, and a trusted Melbourne buyers advocate by your side. By combining data with the experience of professionals, you can make better decisions, get ahead of trends, and avoid overpaying for properties. Conclusion: The Best of Both Worlds So, can you rely on data analytics for property investment? Yes—but only as part of the equation. The best investment decisions come from combining data-driven insights with expert, human advice. By partnering with a knowledgeable buyers advocate in Melbourne, you’ll not only benefit from data but also gain access to off-market opportunities, expert negotiations, and personalized support throughout the buying process. At Concierge Buyers Advocates, we are passionate about helping you make smart property investments. We take pride in giving our clients access to the best properties in Melbourne, backed by data and our unmatched local expertise. Ready to invest? Contact us today to start your journey with the right team by your side!

The dream of building wealth through property investment often leads buyers to wonder: does being closer to the city guarantee better returns? While inner-city locations have historically been prized, the property market is full of opportunities for growth, both in urban hubs and beyond. For buyers navigating this decision, the right guidance—like from a trusted buyers advocate—can make all the difference in uncovering hidden gems that align with your financial goals. Why do People Buy Inner City Properties? For many, investing near the city feels like a no-brainer. Properties in areas close to the CBD come with several undeniable advantages: Convenience and Connectivity: Inner-city properties provide unparalleled access to workplaces, schools, public transport, and amenities like cafes and entertainment. This accessibility keeps demand strong. Scarcity Drives Value: With limited land available for development in city-fringe areas, properties often appreciate due to their exclusivity. It drives exclusivity, but does this translate to better growth? We'll see very soon. Economic and Social Activity: Urban hubs remain the heartbeat of commerce and culture, attracting tenants and buyers alike. In Melbourne, suburbs like Richmond, Fitzroy, and Albert Park have a proven track record of consistent capital growth, with demand staying consistent year after year. We'll see how this compare to the outer suburbs. Why are Buyers Buying in Suburban and Regional Growth Suburbs in 2025? However, focusing solely on inner-city properties might cause you to miss lucrative opportunities in the outer suburbs or even regional areas. Here’s why: Affordability: As property prices soar, many buyers are drawn to more affordable options further from the city. Suburbs like Berwick, Wyndham Vale, and Sunbury are experiencing growth as families seek value for money. Lifestyle Shifts: With remote work and a focus on wellness, larger homes with outdoor spaces in leafy suburbs have become increasingly popular. Infrastructure Booms: Government investments in transport, schools, and shopping centres drive growth in areas once considered too far from the CBD. Suburbans suburbs like Ringwood and Cranbourne in Melbourne are excellent examples where growth has skyrocketed thanks to their balance of affordability and connectivity. Performance of Inner City Properties vs Outer Suburb Properties Now, let's put our logical reasoning aside and let's look at what the data is telling us over the last 10 years. We analysed the price growth of houses (not apartments or units) over the 10 years and compared them to their distance from the capital city, and here is what the data shows. Over the last 10 years, inner city properties have performed the worst. While prices of properties in most areas have experienced approximately 100% growth (ie, the property price doubled) inner city properties have underperformed, and have only experienced approximately 80% growth. Capital Growth vs Distance from CBD This result may be shocking to many, and is likely to have conclusively disproved the "inner city properties appreciate faster" myth. But could there be more to this data. To comprehensively understand what is happening, we need to investigate further. Over the next few weeks, we will dissect the data further to investigate if these numbers vary across the different states and territories in Australia. We will also investigate if the growth correlates to any other factors, such as socio-economic profile of the area/residents. We will also explore if recent hotspots, such as Western Australia and Queensland are worth your considerations, and tell you what you need to know before you invest. Subscribe and stay tuned for our deep dive into the Australian housing market data. We will also disclose the suburbs, locations and property types which had performed the best in the last 10 years. Why Both Inner-city and Suburban Properties Have Potential for Property Investors The truth is, no single rule applies to all properties. Whether you’re considering an inner-city apartment or a family home in the outer suburbs, strategic property investment boils down to understanding the market and seizing the right opportunity. Inner-city Properties: Steady long-term growth, high rental demand, and strong market resilience. Outer Suburbs and Regional Areas: Faster short-term gains, higher rental yields, and opportunities for development. With the right insights, you can unlock the secret of the Australian property market and focus on the real growth areas. The Role of a Buyers Advocate in Your Property Journey Navigating the complexities of the property market—especially in Melbourne—requires more than luck. A professional buyers advocate brings expertise, research, and negotiation power to ensure you’re buying the right property at the right price. Here’s how a buyers advocate transforms your investment experience: Market Expertise: Understand the best growth suburbs through data-driven insights. Stress-Free Buying: Save time and avoid the emotional pitfalls of overpaying or buying the wrong property. Tailored Strategies: Whether you’re after a city-fringe gem or an emerging suburb, a buyers advocate crafts a plan tailored to your goals. At Concierge Buyers Advocates, we treat every property purchase as if it were our own. With a deep understanding of Melbourne’s dynamic property market, we help buyers find opportunities others miss. Inspiration for Property Buyers Your property investment journey doesn’t have to be overwhelming. Every suburb has a story, and every purchase is an opportunity to secure your financial future. The key is knowing where to look and having the right team by your side. Let us help you uncover Melbourne’s next high-growth locations—whether it’s a stylish apartment near the city or a spacious family home in a booming suburb. With the right strategy and the support of a dedicated buyers advocate, you can turn your property dreams into a reality. Contact Concierge Buyers Advocates today and take the first step toward a smarter investment future. Together, we’ll find the right property at the right price, and set you on a path to long-term success.

In the Australian property market, it is common for a buyer to buy a house with the help of a mortgage. A mortgage is a home loan whereby a lender lends you the money, so you can own the property. Most buyers would need a mortgage facility when they buy properties as the price of a typical house in cities such as Melbourne are rising faster than a typical person's savings. Typical Australian mortgages ranges between 20 to 30 years. What’s a 50-Year Mortgage? A 50-year mortgage is exactly that: a home loan that runs for five decades. Australia has traditionally seen 20–30 year terms, but with property prices outpacing wages in some cities like Melbourne, Sydney and Brisbane, some Australian lenders have quietly introduced ultra-long terms to “help” borrowers lower monthly repayments and pass serviceability assessments. Forty-year terms are becoming common, and 50-year loans are being introduced in markets like the US. On paper, a 40–50 year mortgage sounds great: lower repayments, bigger borrowing power, easier entry. In practice, it’s a financial marathon that can outlive your useful working years. For this discussion, let’s assume you’re buying a $1 million home (around Melbourne’s median), with a 20% deposit, at 5.5% p.a. Note: longer terms often attract higher rates, and in Australia rates do move. Historically, rates in the high-teens aren’t unheard of. Loan Comparison — $800,000 at 5.5% p.a. Loan Term Monthly Repayment Total Repaid Total Interest Paid 30 years $4,542 /month $1,635,232 $835,232 40 years $4,126 /month $1,980,558 $1,180,558 50 years $3,919 /month $2,351,258 $1,551,258 The Benefits: Why Some Buyers Like It There’s no denying the appeal, especially for younger or first-home buyers trying to get into Melbourne’s market. Here are the main “pros”: ✅ Lower Monthly Repayments Longer mortgage means lower monthly repayments, which can be good for some. At 5.5% interest, a $1 million property (80% loan = $800,000) over: 30 years costs about $4,542 per month 40 years costs $4126 per month 50 years drops to $3,919 per month Repayment drops between 9% to 15% in a 40 and 50 year mortgage, compare to a 30 year. This can be enough to ease cashflow pressure, or get you through bank serviceability tests. ✅ Increased Borrowing Power Banks assess loans on repayment ratios. A 50-year term stretches those repayments thin, helping borderline applicants qualify. For some, that’s the difference between buying a $900k townhouse in Glen Waverley and settling for a $700k one 10 km away in Clyde North. ✅ Flexibility (If You’re Disciplined) If you treat the 50-year loan as temporary, with the intention to refinance, pay lump sums, or sell within 10–15 years, it can be a short-term affordability foot-in-the-door strategy. The danger lies in treating it as a lifetime plan. The Cost: Why It’s Risky Longer doesn’t mean better. It means you are paying more interest, slower equity growth (more of the growth is going to pay off the lenders), and higher lifetime debt. Putting the numbers together, at 5.5% interest for a $1million house in Melbourne, the total interest you are paying are: 30 year mortgage: $835,232 40 year mortgage: $1,180,558 50 year mortgage: $1,551,258 You are paying almost double the interest over a 20 year longer loan. ❌ Interest Nearly Doubles Over 50 years, you’ll pay almost twice as much interest as a 30-year borrower. For that extra interest repayments, you could have bought a 2nd property. ❌ Equity Builds Painfully Slow In the first decade, most of your repayments go toward paying off the interest, not principal. That means you own almost nothing after 10 years of paying faithfully. If property prices flatten, you risk being stuck with minimal equity and no leverage. To minimise this pain, ensure you buy properties with real good growth potentials. Do your own due diligence or chat with us, instead of taking the sales and marketing agent's words as the gospel truth. Sales agents work for the seller, not buyer. ❌ Retirement Risk If you start a 50-year loan at 35, you’ll finish at 85. Unless you’re planning to work forever, or pass it on to the kids, and let them take over the repayment, that’s not sustainable. The longer your loan term, the less control you have over your financial future. ❌ Higher Total Cost of Living Insurance, maintenance, and interest creep all compound over time. A long mortgage can quietly drain wealth that could’ve gone into super, shares, or investment properties. Who Might Benefit (and Who Definitely Shouldn’t) A 50-year loan can make sense in limited situations: Investors planning to hold and refinance every few years. High-income professionals with strong cashflow but short-term liquidity issues. Strategic buyers who understand how to use debt as a tool. But for most home buyers, it’s a false sense of affordability. It’s not a “cheap” loan. It is a slow bleed. You're actually paying almost double the interest. Your interest payments are more than the price of the house. Banks and lenders love this. Loan Comparison: $800,000 at 5.5% p.a. Loan Term Monthly Repayment Total Repaid Total Interest Paid 30 years $4,542 /month $1,635,232 $835,232 40 years $4,126 /month $1,980,558 $1,180,558 50 years $3,919 /month $2,351,258 $1,551,258 Summary Term Benefit Drawback 30 years Balanced repayments and equity growth. Higher monthly cost. 40 years Better cashflow flexibility. You pay ~40% more in interest. 50 years Lowest monthly repayment. You pay almost double the interest. Practical Man’s Take For most people, a 50-year mortgage is the long zig-zag way up the mountain — same height, just slower, riskier, and you burn more fuel (interest). If the only way a property fits your budget is by doubling your total loan repayment, it probably is not the right property for you. At Concierge Buyers Advocates, we guide clients through decisions like these. Devising strategies and identifying the right properties to buy that suit your budget and goals, instead of extending your budget to suit the property (like all sales agents do). We find you the right property strategies that actually build wealth, not just “make repayments work.” Bottom Line A 50-year mortgage reduces your monthly stress, but almost double your lifetime debt, compared to a 30 year mortgage. Use it only as a short-term lever, not a long-term lifestyle. The smarter play? Focus on properties which will grow in value, so you benefit more from the growth. Buy well, buy within means, and negotiate the right price. Need Help Finding the Right Property Strategy? Let’s make your money, and your years, work harder for you. 👉 Book a Strategy Call with Concierge Buyers Advocates today.