Melbourne property market analysis (2021- 2024)

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Executive Summary
The following report discusses the Melbourne property market between 2021 and 2024 utilizing an
elaborate dataset in regards to different aspects such as property prices, trends by suburbs, and stable
indicators within Melbourne’s property market. Exploring this further with Tableau Desktop, we
analyzed the stability of the market, location-based investment, and price differences between Suburbs.
The main discoveries demonstrate that the Melbourne property market is thus stable, with some
suburbs (those nearer to the CBD) enjoying what can be described as higher growth rates than others.
The stability of the market in respect to properties price shows an upward movement and showing
forecasts that steady property price increase in years to come with somewhat fluctuating in outer
suburbs. Places such as South Yarra and St Kilda show a certain level of an attractive investment activity
because of the proximity to the central business district helps areas realize one of the highest growth
rates for prices among all suburbs. However, investment impact analysis reveals that shift in the
economic indicators such as interest rate influences property price in mid-tier suburbs. About location
strategies, heat maps and price comparison concern long term stability in inner suburbs and higher
short-term return on outer suburbs with higher risks. Here, some general strategic imperatives for
shareholders shall be outlined, using the results of this analysis as reference points, with an emphasis on
the capacity to minimize risks during market fluctuations with the goal of achieving high returns on
capital. Applied to potential investors, the outline of the report provides specific recommendations on
how to successfully approach the constantly evolving property market of Melbourne based on the
tendencies identified in this paper.
Table of Contents
Introduction.................................................................................................................................................4
Data Quality Assessment.............................................................................................................................4
Data Cleaning Process.............................................................................................................................5
Limitations and Challenges......................................................................................................................5
Market Stability Analysis.............................................................................................................................6
Trends in Property Prices.........................................................................................................................6
Location Strategies..................................................................................................................................7
Investment Impacts.................................................................................................................................9
Rental Market Trends............................................................................................................................10
Conclusion.................................................................................................................................................12
Table of Figures
Figure 1: Display Market Stability Analysis Insight.......................................................................................7
Figure 2: Display Location Strategies Insight...............................................................................................9
Figure 3: Display Investment Impacts Insight............................................................................................10
Figure 4: Display Rental Market Trends Insight.........................................................................................11
Introduction
The Melbourne property market has been identified early as one of the most active segments of the
Australia real estate market due to continual high population increase, consistent urban expansion, as
well as cultural and business centers. The property price trends in Melbourne specifically over the last
decade portray an unstable market for property because of the ever-shifting conditions in the market
occasioned by economic circumstances, interest rates, and most recently the COVID-19 pandemic. For
both homeowners and investors in Melbourne the market condition, stability of prices and the
investment aspects have become important as Melbourne extends. The recent trends suggest the
market in property in Australia has fortunately had a slight rebound after the shock it received with the
onset of the pandemic, some suburbs in particular has even shown growth. The suburbs which are near
the Melbourne CBD, including South Yarra, Richmond, and St Kilda, have continued with stable and
consistent price trends due to demand for property units in cities and with good connectivity. On the
other hand, total urban areas exhibit elements of volatility, some outer suburbs’ house prices growing at
a slower rate or declining, as buyer preferences become more discerning.

The purpose of collecting this data is to offer a quantitative outlook on Melbourne property market
based on historical data analysis and supported by data graphics created with Tableau Desktop. The
analysis focuses on several critical aspects:

 Market Stability: Analyzing whether it is capable of expanding its sales even more and if it is
going to)/face some downward trends in the near future. This involves a process where one
tries to look at the past performance of property prices and then try to anticipate the future
performance.
 Location Strategies: Finding out which suburbs are suitable for investment. As the findings on
the price trend over time, the distance from the central business district, and other factors
indicate, the result show where investors are most likely to reap the most profits.
 Investment Impacts: Analyzing how the changes in the economic parameters, including the
interest, have an influence on the property prices of different suburbs. This is especially
important to investors to assist them comprehensively grasp various risks of investment with
regard to various opportunities available in the market.
 Rental Market Trends: Rental yield may not be a primary consideration, nevertheless, look into
how rental yields as reflected through property prices might influence rental environments.

Data Quality Assessment

More precisely, the overall quality of any working result of any project that employs data analysis
methods depends on the quality of the data used (Sivarajah et al., 2017). From this analysis on the
Melbourne property market, much preparation was done to clean the data for further analysis. The data
of this project included property listing, price data, suburb level detail, and other variables that was
collected from 2021 up to 2024. As stated, it featured a database of more than 34000 entries comprising
of the following fields, property prices, suburb names, property types, location-oriented metrics
including distance from Melbourne CBD. It was crucial to clean the data carefully as the information set
is rather large and plays a decisive role in the analysis of possible scenarios.
Data Cleaning Process

Handling Missing Values

The first technique used towards data cleaning was focused on treating missing values in the most
important features which included price, number of bathrooms, and year the buildings were built.
Specifically, about 20% of the properties did not include information on price, which was a major
drawback because price was at the heart of this research (Knoll et al., 2017). When looking at other
forms of imputation, average or median imputation run the danger of distorting the results due to
rounding issues at the suburb or property type level. Thus, we did not include those listings for which
the price was unknown to reach the sample reliability even if this decreased the total number of cases
under analysis.

Normalizing Data Formats

The other anomaly that we noted in the structure of the dataset include: Inconsistencies; Specifically,
the Date of Record, Suburb Names and the Property Type. The Date of Record was also full of strings in
the textual and date format. To handle that, all the date entries were transformed to a unified format
that was used throughout the whole model (DD/MM/YYYY). Also, we pre-processed suburb names to
ensure that similar names were grouped together as the data source contained different spelling of the
suburb names like “St. Kilda” and “saint Kilda” and even different capitalization such as “St Kilda” and
these variations had to be standardized to compare suburb wise data based on suburb name on the
website (Zhang et al., 2016). Property types also underwent harmonization to fall into a single column
for filtering and identifying them as houses, units, townhouse, etc.

Removing Duplicates

Another important process performed was deduplication of property listings. Redundancies happened
since a property could be listed severally after being withdrawn or sold and bought again. The said
repetitions could skew regular averages and prevalence of products such as average price and market in
the provided lists. In order to avoid duplication of a property, through the listing ID column, we removed
other entries of a property and kept the latest as a way of representing the market occurrences (Krause
et al., 2016).

Limitations and Challenges

Nevertheless, some of them persisted even after a rigorous data cleaning process was undertaken Say:
The biggest problem was data missing especially in property prices, areas in outer suburbs had no record
many times which would have under represented. Erasure of listings without priced offers was done to
minimize distortion of the analysis, albeit increasing bias (Agarwal et al., 2018). Moreover, the
availability of rental yield data which was inconsistent meant that we could not systematically discuss
rental factors to a greater extent so we had to specialize in property prices and investment approach.
Despite the attempts to harmonize fields sometimes outliers are not accounted for or there are input
errors made (Viergever et al., 2020). Finally, the analysis was limited to the Melbourne metropolitan
area, meaning that information about regional or other Australian property markets was not considered.
Future Work

In future work, other improvements within the data cleaning process could improve data quality and
consequently the accuracy of analyses. The major opportunity lies in the consideration of more
sophisticated methods for dealing with the missing values in the prices, for instance, the use of the
predictive models or multiple imputations which, on the one hand, may offer more accurate price
readings; on the other – may preserve the integrity of the given dataset. Moreover, seamless execution
of scripts for the normalization of data formats shall occur to account for conformity for all data entries,
especially for often updated datasets. It would also be faster to identify index problems like suburb
name and property type, and less dependant on people to require fixing. In addition, extending the
method for detecting duplicates in real time and creating an efficient system to address this issue would
considerably enhance the quality of the dataset, allowing better tracking of property trends and shifts in
the market. Such advancements would go a long way in filling existing gaps in the property market and
in the process improve on the reliability of conclusions made from the analysis.

Market Stability Analysis

The Market Stability insights as depicted in the attached screenshot provides a straight insight of the
trend of property prices of different subcategories in different suburbs in Melbourne of the analyzed
period. It effective to explore the changes in price patterns in order to make a prognostication on these
grounds as to whether it is a stable market or not.

Trends in Property Prices

This dashboard provides graphical representation of property prices with regard to Melbourne suburbs
and its constant rise and falls for the whole year. However, if the two trends are combined, the graph
presents an overall upward trend in property prices although it is saturated strongly by the fluctuating
trend line. This means that even though there may be short term fluctuations they too have a stable
market in the long run. Filtering by suburb and or property type (houses, units) give more detailed
information with insight of areas such as Ascot Vale which have shown consistency in increase in prices
for excellent investment. Suburb clustering is also presented in the second chart, which divides suburbs
by similar price movements. while the Suburbs in Cluster 1 still show greater fluctuation but higher
future price changes likely due to the distance from the CBD on the Suburbs in Cluster 2 indicated by the
orange line as shown in Figure 1. This clustering shows which suburbs have higher or steadier returns
and which could have higher, but unpredictable growth. In general, examination of price fluctuations on
a suburb-by-suburb basis reveals that inventories in inner-ring suburbs exhibit less variation in their
prices than do the inventories in outer-ring areas, which are significantly more erratic. But despite this,
the overall upward trend remains constant in both clusters indicating an ongoing growth of the market.
Where there are fluctuations, it makes sense to direct attention towards those suburbs displaying
positive growth while regarding outer-ring regions. The result shows that Melbourne is indeed a stable
location for investment in property regardless of the short-term volatility.
 Figure 1: Display Market Stability Analysis Dashboard.

Location Strategies

In this dashboard Melbourne’s suburbs investment opportunities are illustrated using a bar chart and a
heatmap on the Location Strategies Dashboard as shown in Figure 2. Balwyn and Balwyn North are
examples suburban zones with average properties’ price exceeding $2,000,000; however, these can be
characterized as secure long-term favorable investment zones because of their convenient locations in
close proximity to the heart of Melbourne and the high popularity among potential clients. Although
there are more promising suburbs for first time investor with relatively cheaper rates such as Aspendale
and Baysware they are also considered to be risky with higher fluctuation especially for outer suburbs
such as Bacchus marshall. It is a heatmap using circles which represent properties: Darker circles denote
higher prices mostly in eastern suburbs; light circles denote lower prices in outer region. Areas that are
situated in the outskirts of the CBD could be feasible as future developments of infrastructure and
population density will catalyse future appreciation. Location closeness to the CBD still prevails whereby
inner suburb areas such as Balwyn North and Balaclava retain higher price and rental and therefore
suitability for long term investment.
 Figure 2: Display Location Strategies Dashboard.

Investment Impacts

Melbourne suburb investment returns also break down the effect of changes in key market measures
such as interest rates using Investment Impacts Dashboard as shown in Figure 3. The side-by-side bar
chart allows for the comparison of property prices, price fluctuations and building area in different
suburbs. For instance, Balwyn and Balwyn North suburbs are characterized by relatively greater building
area and also higher property prices with close proximity to Melbourne CBD. These areas are favoured
for affluent housing, stay relatively immune to the effects of change in interest rates. According to
Kenway et al, (2024) high cost arising from interest rate hikes means that families can no longer afford
to get into the market hence the lowering of demand notably in areas occupied with pricey houses like
the Balwyn. However, these suburbs are better placed and offer a better investment option once the
interest rates start to stabilize.

On the other hand, affordable residential towns like B, and towns like Beaconsfield and Bayswater are
relatively sensitive to movements in interest rates. As Ota et al. (2024) have pointed out, these more
affordable areas might undergo a significant reduction in demand as borrowing costs rise, as the relative
cost for purchasers increases dramatically. However, during low interest rates, those area can easily
market itself to first-time first time homeowners and the investors who are in constant search of low
risks high returns opportunities. In this dashboard, we have included the What-If Analysis to show the
impact which can be observed from the setting of interest rates, say at 131,000, where less people
would demand affordable housing and the price in areas like Balwyn North will go up. Amid perhaps in
line with Siegel et al. (2021), this simulation will enable investors gauge potential changes in potential
returns and or property prices upon a change in future interest rates. Therefore, this tool is useful in
assisting investors with trends prevailing within the market in order to make informed decisions about
investment.

Figure 3: Display Investment Impacts Dashboard.

Rental Market Trends

Based on the identified research gaps, the Rental Market Trends Dashboard uses an area chart, as
depicted in Figure 4, to present the property price trends for the year to investors. Although rental
returns are missing, the chart clearly outlines the main idea of the property price fluctuation in
Melbourne. From the chart, such fluctuations as a sharp increase then followed by a decline point out to
the dynamic market of properties. Nevertheless, there are some short-term vibrations: if evaluating the
medium-term trend, it may be viewed as moderate appreciation: in fact, this is important for investors
when to invest in particular country and in which type of asset they should invest. The chart makes it
clear that numbers lower at certain times might mean investment opportunities that have potential for
making up in value in future. Many of the suburbs represented in the area chart that presented growing
trends are low risk and perfect for long-term investment. Such areas for instance have constant rising
property prices and confirms the status of being mature markets that investors can use to build wealth
in the long run. On the other hand, occupied by relatively high fluctuation or in other words high price
oscillation, the return of suburbs are far higher but this type of property is quite risky. These variations
are preferred by the clients, who are willing to opt for high risk and high return investments of
speculative nature. Such dynamics in a chart are highly informative to intelligent investors; they enable
investors understand what trends to follow depending on their risk-taking appetite and investment time
horizon. As stated by (Bogin et al., 2019) much fluctuation is a sign of short-term profit-making though
not without increased risks of slippage. Making use of this knowledge investors can make more rational
decisions as concerns the Melbourne property market, so as to maximize both long term capital
appreciation and short-term gain.

Figure 4: Display Rental Market Trends Dashboard.

Location-Based Price Distribution Dashboard

Part of the findings provided in Figure 5 below is the distribution of the property prices with regard to
building area and their distance from Melbourne CBD captured in the Location-Based Price Distribution
Dashboard. The first graph Illustrates a direct and positive relationship between Price and Building Area,
showing that properties in the sample with relatively large built-up areas attract higher prices. This trend
gets enhanced as the prices of properties rise; large structures as equivalent to expensive properties.
This correlation serves good purpose for shareholders, as it supports argumentation about how
executive markets’ properties with greater size bring in more attention and more profits. Through this
research, it has been established that, the size of the property defines its price, depending on the class
and so investors in property will be in a better position to determine the potential value of specific
property and thus invest in properties that have the potential of yielding the highest value appreciation
over time.

The second graph is the scatter plot between Price and Proximity to the CBD, which directly reveals the
fact that closer proximity to Melbourne’s central business district, the price of the property is certainly
higher. This is not at all surprising given that demand for property in the urban fringes is characterized
by high prices for premium properties based on the accessibility of key facilities and business and
transport centers, in the given case – Balwyn North. When it comes to real estate prices, it is established
that the closer to the city center one gets, the higher prices he or she will have to pay while suburban
areas such as Bayswater and Beaconsfield cost less. The following pattern shows that the location is
indeed a critical factor in property value, and centrality to the CBD exercises strong demand and price
pull factors. To the investors this dashboard is a perfect gem that can enable them understand the
extent to which location and size affect the value of a property. The close by suburbs of course costs
more, but it’s a safer investment as there is always demand for buildings in or around the central
business district. Outer suburban areas are cheaper in comparison, but they also come with possible
increased risks, but also potential for bigger gains according to future change in demand and
infrastructure upgrade. This dynamic provides the investors with the opportunity to manage the risk and
reward ratio and pick investment opportunities that meet the investors objectives. By way of the
dashboard, investors can determine which areas and property sizes would be most advantageous to
invest in, at the right time within the Melbourne property market.
 Figure 5: Display Location Based Price Distribution Dashboard.

Price and Demand Relationship Dashboard

The Price and Demand Relationship Dashboard presents the findings with respect to the pricing
distribution of properties and their comparison with target prices as shown in Figure 6. The histogram
demonstrates the price representative of the properties in the Melbourne market, and most of the
properties lie in the $500, 000 to $2,000, 000 range. It is employed for demonstrating where most of the
exchanges take place, therefore beneficial in analyzing concentrations and demands. The scatter chart
reviews the actual property prices with target price of properties revealing trends in regard to value
against expectation among investors. Targets prices are achieved or surpassed in case the properties are
located along the diagonal, while below-target prices are recorded in case the properties are below the
diagonal. The research enables investors to monitor the current market in terms of price trends and to
determine suburbs in which prices are at the expected levels or even above the investor’s expectations
to enhance sound investment decisions.
Figure 6: Display Price and Demand Relationship Dashboard.
One – Page Infographic
Conclusion
From the study of the year-on-year statistics of Melbourne’s property market up to 2024 the following
critical observation has been noted. The analysis of average property prices ranging through the entire
data set shows that there were several short-lived drops, but the overall increase in property prices has
continuously made Melbourne one of the most popular investment locations. The steadily ever-rising
property prices are evidence of a stable market and this makes it one of the most appealing investment
destinations for both national and foreign investors who want assured, consistent returns. The ability of
the city to recover from economic shocks, especially in some of the affluent suburbs including Balwyn
and Balwyn North makes investing in the city a relatively conservative proposition but one that offers
relatively steady appreciation. These suburbs being consistent with demand and their prices not being
very volatile in the market, have remained profitable and are still profitable for investors as they look for
long term options. However, it is also evident that markets in major cities like South Yarra and Prahran
continue to be seductive but at a relatively higher cost. These areas being properly developed and
located enjoys security and stability for the investors. However, properties in these areas have higher
costs compared with other areas that have higher market risks; therefore, they are ideal for low risk
takers who are willing to invest in properties rather than looking for high profits. These inner-city
locations are fixed that even if there are fluctuations in the market, the properties prices hardly
fluctuate and offer protection to those investors who are cautious. Unlike the southern eastern markets
such as Bayswater and Beaconsfield, which are outer suburbs, it is a different proposition of investment.
Indeed, these suburbs cost more to enter and involve inherently greater risk owing to their higher price
variability. Nevertheless, during upward market movements, these areas are capable of offering very
good capital gains, and for the braver investment bucks, more returns. This position of greater price
volatility of houses in these peripheral suburbial locations presents the investor a window of short-term
capital gains, though comes with risk of a bear run when the market cools. The reasons that can be seen
in these areas are that with time, the infrastructure develops and the extended growth of population
demands hence outcompeting the areas in the long run. This was revealed by the interest rates that
have a profound influence on property bearing special reference to the outer suburbs. According to
Melzer (2005), high interest rates reduce demand due to sensitivity particularly in the regions where
buyers borrow mostly. Indeed, in the outer suburbs ‘relatively small movements in interest rates do
have on impact on buyers’ appetite and this clearly translates to slower rate of house price capitalization
if not a temporary price dip’. On the Other hand, the lower the rates the higher the demand in these
areas due to the attraction of first time homeowners and investors who look for higher returns. It was,
therefore, important for investors to factor the interest rates when planning their strategies since this
will be the major determinant of their earnings/returns and risks.
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