Williamstown VIC Property Investment

## 1. Investment Verdict We rate Williamstown, VIC as a Buy, with the single most important number justifying this verdict being its Investment Scorecard rating of 70.0/100. This score indicates a relatively strong investment opportunity, driven by a combination of factors including its stable market cycle, high rental demand, and moderate supply pipeline.

## 2. Market Overview The median house price in Williamstown is $1,584,000, while the median unit price is $1,447,500. Over the past year, house prices have grown by 3.8%, and over the past five years, they have grown at a compound annual growth rate (CAGR) of 6.7%. However, the 3-year growth forecast suggests a potential slowdown, with a predicted decline of -1.5%. The median weekly rent is $795, resulting in a gross rental yield of 2.6%. With a vacancy rate of 2.2% and an owner-occupier rate of 72%, the market signals a relatively balanced supply and demand dynamic, with a slight leaning towards sellers due to the low vacancy rate.

## 3. Rental Market The rental market in Williamstown is characterized by a low vacancy rate of 2.2%, indicating high demand for rental properties. The median weekly rent is $795, which translates to a gross rental yield of 2.6%. This yield is relatively low compared to some comparable suburbs, such as Collingwood, which has a yield of 3.3%. However, the demand rating is high, suggesting that investors can expect to find tenants relatively easily. For investors, this means that while the yield may not be exceptionally high, the low vacancy rate and high demand provide a degree of security and potential for long-term rental income.

## 4. Short-Term Rental Opportunity The short-term rental (STR) market in Williamstown offers a median nightly rate of $506, with an occupancy rate of 48%. This translates to an estimated annual revenue of approximately $132,000 (assuming 365 days of potential rental and 48% occupancy). Compared to the long-term rental (LTR) market, which offers a gross rental yield of 2.6%, the STR market may provide a higher potential return, but it also comes with higher management costs and more variability in occupancy. Therefore, the choice between LTR and STR in Williamstown depends on the investor's strategy and risk tolerance.

## 5. Infrastructure & Growth Drivers Williamstown benefits from its well-connected inner-city location, with several major infrastructure projects underway, including the West Gate Tunnel, Metro Tunnel, and Suburban Rail Loop East. These projects are expected to enhance transport links and potentially drive demand for housing in the area. The suburb's employment base and its proximity to Melbourne's CBD also contribute to its attractiveness. However, the moderate supply pipeline, consistent with long-term averages, may limit the potential for significant price growth in the short term.

## 6. Bull Case If market conditions hold or improve, with the infrastructure projects completing as planned and the employment market remaining strong, the upside scenario for Williamstown could be significant. With a 5-year CAGR of 6.7%, if this growth rate were to continue or even increase slightly, investors could see substantial capital gains. For example, if the median house price were to grow at an annual rate of 7% over the next 5 years, it could reach approximately $2,400,000, representing a gain of over 50% from the current median price.

## 7. Risks There are several specific risks associated with investing in Williamstown. The predicted -1.5% growth over the next 3 years suggests a potential softening of the market, which could impact capital gains. The vacancy trend is worsening, which, although currently at a low 2.2%, could increase and affect rental income. The moderate supply pipeline, while not excessively high, could still contribute to a balanced market, limiting price growth. Additionally, the suburb's unemployment rate of 4.6% is a factor to consider, although it is relatively in line with national averages. Lastly, the potential for interest rate changes could affect the attractiveness of property investments, given the current low yield environment.

## 8. The Play For investors looking to enter the Williamstown market, we recommend targeting properties in the $1.4 million to $1.7 million range for houses, aiming for a minimum gross rental yield of 2.8%. Watch signals include changes in the vacancy rate, shifts in rental demand, and the progress of infrastructure projects. The recommended strategy is to focus on long-term holds, potentially considering a mix of long-term and short-term rentals to diversify income streams. However, it's crucial to carefully assess the suburb's dynamics, considering both the potential for growth and the associated risks.

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