Display homes provide a unique, lucrative investment opportunity
The Victorian property market is widely tipped to improve greatly in 2024 and beyond, with one particular asset type that investors have largely overlooked offering strong, secure returns, says Rob Bird, Executive General Manager, ABN Group Victoria.
Investors looking for quick returns in the Victorian property market have, of late, been largely disappointed.
There is no question Victoria, and particularly Melbourne, has faced challenges from an investor standpoint over the past few years. Extended lockdowns through Covid, rising interest rates, supply chain shortages and consumer confidence, among many other factors, played a role in limiting property value growth through 2023 and early 2024.
There are, however, some assets that are outperforming the wider market for those willing to invest outside the box.
Rob Bird, Executive General Manager, ABN Group Victoria, detailed one unique investment angle that has the added advantage of always housing the perfect rental tenant.
“By diversifying your portfolio, you may mitigate potential losses that can occur with specific market downturns – it’s the age-old adage of ‘don’t put all your eggs in one basket’,” Mr Bird said.
“Diversifying your portfolio can include investing in different types of property such as existing homes, apartments and even display homes.”
Purchasing a display home provides a distinctive opportunity for investors, with the opportunity to buy a home in key growth corridors in premium new communities designed by Australia’s leading developers.
“There are a range of display homes across Victoria, and depending on the builder you’re investing with, there are even display homes in Melbourne’s established suburbs including Bentleigh and Springvale.”
Mr Bird identified a number of key benefits to investing in display homes rather than established properties including:
- having the perfect tenant – the builder themselves who will always ensure the display homes are presented in the best way possible
- guaranteed rental return for up to two years, in some cases even beyond
- no ongoing maintenance during the display leaseback period
- no agency or property management fees
- no risk of missed rental payments
- potential for increased property value as further amenities are completed
- market leading floor plans and facades
At the end of the leaseback period, the builder will convert the sales space within a display home along with any maintenance, meaning the investor will essentially have a new home two years into your ownership of the property.
“It is a great way to diversify your property portfolio with guaranteed rent and certainty over your tenant and rental repayments.”
Up to 7 per cent per annum rental returns are achievable on select display homes for up to two years, with homes located in Victoria’s key growth corridors.
“It’s important to remember that every investor is different and we’d always recommend seeking independent advice from a specialised finance professional”, Mr Bird said.
Melbourne property market set for rebound
The Melbourne property market’s woes have been magnified by the strong performance of other capital cities.
There are green shoots appearing, with 3.2 per cent growth in the past 12 months and real estate investor numbers surging to 35.2 per cent of buyers this year, a significant increase from last year where the investor share was 27 per cent.
Investors seem to be sensing a turnaround.
Realestate.com.au has issued reports referencing Oxford Economics Australia, PropTrack, and the big four banks all forecasting Melbourne’s growth to return following a resurgence in migration from mid-2025.
“We’re all well aware property investment is a long-term game and it’s vital investors look at the data and the forecasts to ensure they’re making informed decisions, but it’s clear many forecasts are predicting Melbourne could be bouncing back in a big way,” Mr Bird said.
Melbourne’s rental vacancy rates also remain alarmingly low sitting at just 0.9 per cent, which will continue to drive the need for housing supply in the city.
“With the added pressure from forecasted population growth and predictions of lowering interest rates, there’s good reason to believe we’ll see demand in Melbourne surge, with rental yield increases following as a result.”
This information is intended to provided general advice only. It does not take into consideration your personal objectives, financial situation or needs. Before acting on any information provided, you should consider the appropriateness of the information regarding your objectives, financial situation and needs. We strongly recommend you engage with an appropriate finance professional to discuss your own personal situation, including your lender/bank, finance broker, financial planner and/or accountant.
