Delahey VIC Property Investment

## 1. Investment Verdict Hold – the 3.7% gross rental yield is the key figure. It balances the strong recent price growth (12.5% over the past 12 months) with a modest income return, signalling a stable but not spectacular upside.

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## 2. Market Overview - Median house price: $708,000 - Median unit price: $620,000 - 1‑yr price growth: 12.5% - 5‑yr CAGR: 4.5% per year - 3‑yr growth forecast: 13.5%

*Signal:* The market is in a rapid appreciation phase (12.5% y‑o‑y) while still delivering a 4.5% long‑term compound growth rate. For buyers, the high recent growth means entry prices are elevated; for sellers, the data suggests they can command premium prices now. Days on market is not supplied, so we cannot comment on market speed.

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## 3. Rental Market - Median weekly rent: $500 / wk - Gross rental yield: 3.7%

*Vacancy rate* and *demand rating* are not provided, so we cannot quantify those factors. With a $500 weekly rent and a 3.7% yield, investors receive a modest cash‑flow buffer that is sufficient to cover typical mortgage service on a 30‑year loan at current interest rates, but it does not leave a large surplus for reinvestment.

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## 4. Short‑Term Rental Opportunity No STR‑specific data (nightly rate, occupancy, or estimated annual revenue) is supplied. Consequently we cannot calculate an STR yield or compare it to the long‑term rental (LTR) return. In the absence of evidence that STR performance exceeds the 3.7% LTR yield, the default recommendation is to focus on LTR.

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## 5. Infrastructure & Growth Drivers The data set does not list any known projects, transport upgrades, or major employment hubs. Without concrete information we cannot attribute demand to specific infrastructure or job‑creation drivers.

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## 6. Bull Case If the 3‑yr growth forecast of 13.5% materialises, the median house price could climb to:

\[ \$708,000 \times 1.135 \approx \$804,000 \]

*Potential upside:* ≈ $96,000 capital gain on a house purchase at today’s median price. A similar proportional rise would apply to units (from $620,000 to ≈ $704,000).

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## 7. Risks | Risk | Data‑backed Concern | |------|----------------------| | Rate sensitivity | With a 3.7% gross yield, a 1 % rise in interest rates would erode net cash flow, tightening the investor’s debt service capacity. | | Growth slowdown | The 5‑yr CAGR of 4.5% / yr is far lower than the recent 12.5% y‑o‑y surge. If growth reverts to the longer‑term 4.5% pace, price appreciation would decelerate sharply. | | Vacancy risk | Vacancy rate is not supplied; an unexpected rise could push the effective yield below the 3.7% headline figure. | | Supply pipeline | No data on upcoming housing supply; a sudden influx of new units could increase competition and pressure rents. |

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## 8. The Play - Entry price range: $620,000 – $708,000 (median unit to median house). - Minimum yield target: 3.7% (the current gross yield). - Watch signals: 1. Publication of days‑on‑market and vacancy statistics for Delahey. 2. Changes in the 3‑yr growth forecast or a shift in the 5‑yr CAGR. 3. Interest‑rate movements that affect net cash flow. - Recommended strategy: Acquire within the $620k–$708k band, aim for a property that can at least match the 3.7% gross yield, and hold for 3–5 years to capture the forecast 13.5% capital growth. Re‑assess if vacancy data emerges or if interest rates rise sharply, which could warrant a shift to a more defensive position.