Croydon Hills VIC Property Investment

## 1. Investment Verdict We rate Croydon Hills, VIC as a Hold, with the single most important number justifying this verdict being its 63.0/100 Investment Scorecard rating. This score indicates a stable market with potential for growth, but not without its considerations.

## 2. Market Overview Croydon Hills presents a median house price of $1,200,540 and a median unit price of $925,868. Over the past year, the suburb has experienced a 7.0% price growth, with a 5-year compound annual growth rate (CAGR) of 5.8%. The 3-year growth forecast is promising, with an expected 13.5% increase. Although days on market data are not available, the combination of these growth figures signals a strong market for sellers. For buyers, it indicates a need to act quickly due to the potential for continued price increases. The high owner-occupier rate of 74% suggests a stable community, which can be attractive for both buyers and investors.

## 3. Rental Market The rental market in Croydon Hills is characterized by a low vacancy rate of 2.2%, indicating high demand for rental properties. The median weekly rent is $730, resulting in a gross rental yield of 3.2% for houses. This yield, while not the highest, is competitive when considering the suburb's growth potential and low vacancy rate. The demand rating is high, driven by the low unemployment rate of 4.0% and the overall desirability of the area. For investors, this presents an opportunity for stable rental income, albeit with a yield that may not be as high as in other suburbs.

## 4. Short-Term Rental Opportunity The short-term rental (STR) market in Croydon Hills offers a median nightly rate of $428, with an occupancy rate of 48%. While the occupancy rate might seem moderate, the nightly rate is relatively high, suggesting that when properties are occupied, they can generate significant revenue. Estimated annual revenue for an STR property would depend on the specific occupancy levels achieved, but even at 48% occupancy, the potential for substantial income exists. Comparing this to the long-term rental (LTR) market, the STR option might offer better returns for the right property and management strategy, especially considering the high demand for short-term accommodations in desirable suburbs.

## 5. Infrastructure & Growth Drivers The Angliss Hospital Expansion, currently under delivery, is a significant infrastructure project in the area, likely to drive demand for housing and rentals. Standard suburban transport access supports the livability and accessibility of Croydon Hills, making it an attractive option for residents. The low supply pipeline, with price growth outpacing new supply, suggests that demand will continue to drive price increases, supporting the 3-year growth forecast of 13.5%. This scenario is favorable for investors looking for capital appreciation.

## 6. Bull Case If market conditions hold or improve, with the hospital expansion completing and potentially bringing more employment opportunities to the area, the upside scenario for Croydon Hills is significant. With a 3-year growth forecast of 13.5%, investors could see substantial capital gains. Additionally, if the rental yield increases even slightly, due to rising rents outpacing property price growth, the attractiveness of the suburb for investors could increase further. A scenario where the vacancy rate remains low and the rental demand stays high could push median weekly rents above $800, improving the gross rental yield and making the suburb even more appealing.

## 7. Risks Despite the positive outlook, there are risks to consider. The vacancy risk, although currently low at 2.2%, could increase if new supply enters the market or if economic conditions deteriorate. The suburb's low unemployment rate of 4.0% is a positive, but any significant increase in unemployment could negatively impact the rental market. The supply pipeline is currently low, but any unexpected increase in development could outpace demand and affect price growth. Rate sensitivity is also a consideration, as interest rate changes could impact borrowing costs for investors and affordability for buyers, potentially slowing price growth.

## 8. The Play For investors looking to enter the Croydon Hills market, an entry range of $900,000 to $1,400,000 for houses could provide a balance between affordability and potential for growth. A minimum yield to target would be around 3.5% to ensure a decent return on investment. Watch signals include any changes in the vacancy rate, shifts in rental demand, and updates on the Angliss Hospital Expansion. The recommended strategy is to hold existing properties, given the stable market and growth potential, and to consider entry into the market for new investors looking for long-term appreciation and stable rental income.

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