Donnybrook VIC Property Investment

## 1. Investment Verdict We recommend a Buy for Donnybrook, VIC, with the single most important number justifying this decision being the 3yr growth forecast of 13.3%. This indicates a strong potential for capital appreciation in the medium term.

## 2. Market Overview The median house price in Donnybrook is $664,000, while the median unit price is $586,122. The 1yr price growth is 1.8%, and the 5yr CAGR is 5.1%/yr. Although days on market are not available, the stable market cycle and high owner-occupier rate of 71% suggest a relatively balanced market. This balance signals that buyers may have some negotiating power, but sellers are still in a good position due to the overall growth trend.

## 3. Rental Market The vacancy rate is 2.2%, indicating a tight rental market. The median weekly rent is $500/wk, resulting in a gross rental yield of 3.9%. With rental demand rated as high, this presents a favorable environment for investors. The low vacancy rate and high demand suggest that investors can expect stable rental income and potentially low vacancy periods.

## 4. Short-Term Rental Opportunity Unfortunately, the data for short-term rental opportunities in Donnybrook is not available. Therefore, we cannot estimate the nightly rate, occupancy, or annual revenue from short-term rentals. Without this data, it's challenging to compare the viability of long-term rentals (LTR) versus short-term rentals (STR) in this area. However, given the high demand for rentals and low vacancy rate, long-term rentals might be a more stable and predictable option for investors.

## 5. Infrastructure & Growth Drivers The announced Melbourne Airport Rail (SRL Airport) is a significant infrastructure project that could drive growth in Donnybrook. Standard suburban transport access is already available, making the area relatively accessible. The lack of significant risk factors and a moderate supply pipeline, coupled with strong population growth, suggest that demand for housing is likely to remain high. Employment opportunities and the overall economic base of the area will be crucial in sustaining this demand.

## 6. Bull Case If conditions hold or improve, with the 3yr growth forecast of 13.3% materializing, Donnybrook could see significant capital appreciation. For a median house price of $664,000, a 13.3% annual growth over three years could result in a price increase of approximately $267,000, bringing the median house price to around $931,000. This scenario presents a compelling upside for investors, especially when combined with the potential for rental yield.

## 7. Risks Despite the overall positive outlook, there are specific risks to consider. The unemployment rate of 7.8% is higher than the national average, which could impact rental demand and property prices if it increases. However, there are no significant risk factors identified for this suburb, which mitigates some of the common concerns. The moderate supply pipeline, driven by strong population growth, might lead to an increase in housing supply, potentially affecting prices and rental yields. However, this is not currently identified as a major risk.

## 8. The Play For investors looking to enter the Donnybrook market, the recommended entry range could be around the median prices of $664,000 for houses and $586,122 for units. Investors should target a minimum gross rental yield of 3.9% to ensure a reasonable return on investment. Watch signals include changes in the unemployment rate, updates on the Melbourne Airport Rail project, and shifts in the supply pipeline. The recommended strategy is to hold for the medium term to capitalize on the forecasted growth, while closely monitoring market conditions and adjusting the investment strategy as necessary.

The flood risk and bushfire risk in Donnybrook are classified as LOW, according to the state planning portal overlay. Additionally, there is no heritage overlay present in this area, as per the state planning overlay centroid. These factors contribute to a relatively stable investment environment.

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