VIC Inner Melb period apartments - how to avoid the 'South Yarra' style high-rise tower problem

I'm considering a new PPOR / Investment property and like the inner SE Melb period style apartments (20's through to 60's).

They are nice to live in, many of them are house sized, quality builds with huge bedrooms and so on - small blocks of 6 - 10.

I owned one myself for 10 years in nice leafy court in Toorak however and even though it ticked all the boxes it performed poorly (2007 - 2017) - less than 3% capital gain each year on average.

Some say this was due to the huge increase of supply of the mega towers built around the South Yarra train station. While they are different property altogether to renters they are favoured because they are new (black tap handles), have better car parks, many cases more affordable and close to train stations.

Now, after recent periods of underperformance, I think these period style apartments seem to represent good value, and in some suburbs like Toorak, Armadale and surrounds they've been quite flat and have actually dropped 5-10%. e.g. decent 1 bedders are $450k and nice 2 bedders ~$850k.

I wouldn't mind buying one of them again to live in, but am concerned about these new towers going up.

You can see these ugly dog box towers in Hawthorn, Hawthorn East, South Yarra, Armadale, Malvern, Glen Iris and so on. Even in Toorak now (although they are upper spec ones). They all seem to be on main roads and/or near the train stations... for now.

Would the key be to buy one nestled deep among the nice houses away from the main streets, village strips and train stations (whilst still being walking distance to them)?

Or do we think this problem will simply continue, continue to get worse and these style apartments are generally best avoided as they will remain flat? (and stick to a proper house in a middle or outer area).

 

I can't speak for Melbourne, but in my part of Sydney, small blocks of older flats in areas surrounded by housing are a safer bet. High rise logically tends to happen near transport and shops. Areas away from these are usually not zoned for high rise.

 

I was just thinking... maybe a villa unit a little further out is the way to go (one surrounded by housing) in the 'inner-middle' ring (Brighton, Glen Iris, Caufield North etc). It's more 'house like' and (hopefully) gets similar growth to a house.

When I'm looking at an asset I'll own for 20-30 years, it's hard to think of what Melbourne will look like with the population growing the way it is.

How long and how many million more people before Prahran, Armadale etc eventually turn into a Southbank?

Last I heard Melb is projected to be 8 million (up from 5) by 2050.

 

You need to choose ones with 1. Future owner occupier appeal and 2. Good land content

Think about who you will eventually sell to, and does it tick all their boxes.

In the areas you mention, you should be looking for small blocks (6-8 max) and ideally targeting future downsizers - so for example a ground floor apartment with its own garage and courtyard space is going to be much more appealing than one on the second floor with a carport.