Buying in Melbourne: What are ‘Not In My Backyard’ suburbs and why should you check them out?

However, property investors must not disregard the benefits of land and housing. As a property investor and professional, Sam personally believes in the wealth-creation potential of the robust land market in Melbourne.

He said: “I'm a big believer in Melbourne's very tightly held ... 'NIMBY' (Not In My Backyard) suburbs … There are some planning instruments in Melbourne which actually identify that certain suburbs are very much always going to be undersupplied. They're full of character housings.”

These suburbs often consist of assets in the higher end of the property market, making it costly to develop quality multi-unit dwellings.

According to Sam, developers usually have to combine three to four expensive homes, which costs around $3 million each, and then abide by the height limit set by the local council, which is usually three storeys. Due to high prices, only a few people can afford to live in the spaces available—hence, the tag ‘Not In My Backyard’.

“It's kind of the concept of rich people love being rich … Rich people make sure there's no supply in their neighbourhood because if they don't let supply in, values tend to increase,” Sam explained.

‘NIMBY’ suburbs offers a unique opportunity for property investors to jump into the emerging apartment market in Melbourne without having to worry too much about the possibility of oversupply. Moreover, since these suburbs are among Melbourne’s top 20 markets, the demand is more likely to be consistent.

The property professional said: “Over and above that, as we know, for an investor … it's about who will want the property in the future.”

“These very, very prestigious areas have very, very affluent people who will downsize. Buying or selling to those people one day, or renting to those people, is very much a way to look at the longevity of your investment.

“I'm a big fan of Melbourne's ... 'NIMBY' market scene. They're very, very pretty areas, very undersupplied, and certainly tightly held,” he added.

Best 'NIMBY' suburbs

Melbourne’s ‘NIMBY’ suburbs include Toorak and Armadale, as well as emerging markets such as Ivanhoe, which is comparable to Sydney’s Mosman. Property investors should also look into Collingwoord, Fitzroy, and Richmond.

“For the first time in a long time, that middle to inner ring area of Melbourne in the apartment base is very, very solid,” according to Sam.

He advises against investing in Docklands, Southbank, and the central business district, which could use a little more evolution as investment spaces.

In order to find out which property is the perfect addition to your portfolio, “stress test” all the recommendations you get from professionals and make sure to do your own research on the ground.

“Irrespective of where you're buying, [you should consider] some fundamental principles there in terms of what creates value in property. It's about uniqueness, it's about supply … [and] all these [growth drivers],” Phil concluded. 

Tune in to Sam Saggers’ episode on The Smart Property Investment Show to know more about his take on the so-called property crash as well as his advice to investors about the ‘big three’ points he looks for before purchasing a property.

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