Essendon VIC Property Investment

## 1. Investment Verdict We recommend a Buy for Essendon, VIC, with the single most important number justifying this verdict being the 3-year growth forecast of 13.5%. This indicates a strong potential for capital appreciation in the suburb.

## 2. Market Overview The median house price in Essendon is $1,640,000, while the median unit price is $542,500. The suburb has experienced a 1-year price growth of 2.5% and a 5-year compound annual growth rate (CAGR) of 5.2%. Although days on market data are not available, the stable market cycle and high rental demand suggest a favorable environment for sellers. With an owner-occupier rate of 64%, Essendon appears to be a sought-after suburb for both investors and owner-occupiers.

## 3. Rental Market The vacancy rate in Essendon is 2.2%, indicating a tight rental market. The median weekly rent is $795, resulting in a gross rental yield of 2.5%. The high rental demand and low vacancy rate suggest that investors can expect stable rental income. With an unemployment rate of 4.2%, the suburb's employment base is relatively strong, supporting the rental market.

## 4. Short-Term Rental Opportunity The median nightly rate for short-term rentals in Essendon is $416, with an occupancy rate of 48%. Assuming a 365-day year, the estimated annual revenue for a short-term rental property would be approximately $76,000 (416 * 365 * 0.48). However, considering the gross rental yield of 2.5% for traditional rentals, long-term rentals may be a more stable and attractive option for investors.

## 5. Infrastructure & Growth Drivers Essendon benefits from its well-connected inner-city location, with several major infrastructure projects underway or announced, including the West Gate Tunnel, Metro Tunnel, Melbourne Airport Rail, and North East Link. These projects are likely to drive demand for housing in the suburb and support its growth. The lack of significant risk factors and a low supply pipeline, with price growth outpacing new supply, further contribute to the suburb's attractiveness.

## 6. Bull Case If conditions hold or improve, the upside scenario for Essendon is promising. With a 3-year growth forecast of 13.5%, the suburb's median house price could potentially reach $1,853,000 ($1,640,000 * (1 + 0.135)^3). This represents a significant capital appreciation opportunity for investors. Additionally, the suburb's strong rental market and limited supply pipeline suggest that rental yields could remain stable or even increase.

## 7. Risks While no significant risk factors have been identified for Essendon, investors should be aware of potential risks. The suburb's low vacancy rate of 2.2% and high owner-occupier rate of 64% suggest a relatively stable market, but investors should still consider the potential for vacancy risk. With an unemployment rate of 4.2%, the suburb's employment base is relatively strong, but investors should monitor the job market for any changes. The low supply pipeline and limited development pipeline also suggest that the suburb may be less susceptible to oversupply risks. However, investors should remain vigilant and monitor the market for any changes.

## 8. The Play For investors looking to enter the Essendon market, we recommend targeting properties with a minimum gross rental yield of 2.5%. Investors should also monitor the market for any changes in the vacancy rate, rental demand, and supply pipeline. With a stable market cycle and high rental demand, Essendon appears to be a relatively low-risk investment opportunity. However, investors should always conduct thorough research and seek professional advice before making investment decisions.

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