Forest Hill VIC Property Investment

## 1. Investment Verdict We recommend a Buy for Forest Hill, VIC, with the single most important number justifying this decision being the 5-year Compound Annual Growth Rate (CAGR) of 5.4%/yr, indicating a stable and growing market.

## 2. Market Overview The median house price in Forest Hill is reported as $1,128,990 by a single source, OnTheHouse, which we must note has not been peer-validated. The median unit price is $720,807. The market has seen a 1-year price growth of 4.2% and a 5-year CAGR of 5.4%/yr, suggesting a steady upward trend. However, the lack of data on days on market limits our understanding of current market dynamics. For buyers, this stability might offer a sense of security, while for sellers, the growth trend could indicate a good time to sell, especially considering the high owner-occupier rate of 68%.

## 3. Rental Market The rental market in Forest Hill shows a vacancy rate of 2.2%, indicating a tight rental market. The median weekly rent is $650/wk, with a gross rental yield of 3.0%. The rental demand is rated as high, which, combined with the low vacancy rate, suggests a favorable environment for landlords. Investors can expect relatively stable rental income, given the low vacancy rate and high demand.

## 4. Short-Term Rental Opportunity Unfortunately, specific data on short-term rental (STR) nightly rates and occupancy is not available for Forest Hill. Without this data, it's challenging to estimate the annual revenue from STRs accurately. However, given the high demand for rentals and the stable market, long-term rentals might be a more predictable and stable option for investors in this suburb.

## 5. Infrastructure & Growth Drivers Forest Hill benefits from several infrastructure projects, including the Suburban Rail Loop East, the Angliss Hospital Expansion, and the North East Link, all of which are under construction. These projects can drive demand for housing by improving transport links and enhancing local amenities. Standard suburban transport access is also available, making the area more attractive to potential residents. The presence of these infrastructure projects and the expansion of the Angliss Hospital could support long-term growth in the area.

## 6. Bull Case If market conditions hold or improve, with the continued infrastructure development and stable economic conditions, Forest Hill could see an upside scenario. The 3-year growth forecast of 2.3% per annum, while lower than the 5-year CAGR, still indicates potential for growth. If the suburb can maintain its high owner-occupier rate and continue to attract families and professionals with its improving infrastructure, we could see prices appreciate further, potentially exceeding the forecasted growth rates.

## 7. Risks The specific risks for Forest Hill are relatively low, with no significant risk factors identified. The supply pipeline is moderate, consistent with long-term averages, which suggests that the market is not likely to be oversupplied with new housing in the near future. The unemployment rate of 4.9% is close to the national average, indicating a stable employment base. The flood risk and bushfire risk are both classified as low according to the state planning portal overlay. However, investors should always be aware of potential interest rate changes and their impact on the property market, as well as the general economic conditions that could affect housing demand.

## 8. The Play For investors looking to enter the Forest Hill market, we recommend targeting properties with a minimum gross yield of 3.0% to ensure a reasonable return on investment. Given the stable market and growth forecast, buyers should look for signals of continued infrastructure development and monitor the rental market for any shifts in demand. The recommended strategy is to hold for the long term, benefiting from the anticipated growth and stable rental income. However, it's crucial to conduct thorough research and consider professional advice before making any 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.