Melbourne vs Perth vs Brisbane: Where to Invest $650K?

So, you've got $650,000 to invest, and you've been hearing hype about Melbourne. You know Brisbane has been booming, has had outstanding performance. So which one could be the best to invest $650,000 in 2026? In this episode, I'm going to break down each of these three locations, give you an understanding of their strength, weaknesses, and let the data explain what choice could be a better fit for strong portfolio growth in 2026. I'm Joma, Senior Research Analyst at InvestorKit.

Let's get into it. So in this episode, we're going through the data of three major capital cities, Melbourne, Perth, Brisbane. What I'm going to do is to first go through all the metrics in terms of economic conditions, sales market conditions, and rental market conditions. Then we'll be rating them in terms of number of market options, short-term growth momentum, long-term stability, cycle position, rental growth momentum, and rental yield level. After the rating, it'll be clear which market would be the best fit for you.

Now let's start from Melbourne. Our budget is relatively small, $650,000. We cannot buy in every region in a major capital city. So for Melbourne, which regions can we look at? In terms of LGAs, in Melbourne, we still have five LGAs where median house price is still under $700,000 or just around $700,000.

And there's potential for you to find a decent house of under $650,000. So these five LGAs are Melton, Wyndham in the west, Tullamarine in the north, Brimbank in midwest, and Casey in southeast. So in Melbourne, we have five LGAs to choose from. That doesn't sound really bad. The only thing is, if you're looking at Melton, Wyndham, or Casey LGAs, it's important to look in more established areas because in these LGAs, a lot of suburbs are full of new housing supply.

And when supply is high, while demand cannot catch up, growth could be limited. So make sure that you're looking at more established areas. And then all these LGAs or submarkets are seeing improving market pressure. Inventory-wise, we're looking at two to four months of stock across all these LGAs, with Casey North and Brimbank seeing the lowest inventory of around two months of stock, and Wyndham with the highest inventory level of 4. 2 months of stock.

But the good thing is, in all these markets, inventories are trending downward, with a 25% to 40% decrease in a year, with a 25% to 40% drop over the past year. So that's a clear sign that market pressure is increasing. And we see a similar trend in days on market as well. Across all these markets, house sale days on market has been trending downward since early 2025. The largest drop happened in Brimbank, with a 14% drop in a year.

Now, in the rental market, vacancy rates actually varies across regions. As I mentioned earlier, in some of these regions, there are new house being constructed. And in those regions, vacancy rate tends to be a little bit higher. One example is the Melton area. Currently, the overall vacancy rate of the Melton SA3 is around 3.

4%. But if we are looking at established suburbs in the Melton town area or at the west end of the SA3, closer to the Melbourne metro area, the suburb level vacancy rate would be much lower than this. And for more established regions like Brimbank or the north part of Casey, we're just looking at around 1% vacancy rate, really tight rental market. Now, how about rental yield? Rental return rate.

We know Melbourne isn't known for very healthy rental yields. So in these relatively affordable areas, yields are not extremely high, but acceptable. For example, in Tullamarine area, we're looking at 4. 3% rental yield. That's one of the healthiest in the greater Melbourne area.

And in the south part of Casey, we're also looking at 4. 2, 4. 3% rental yield. But in the more established area like Brimbank or the north part of Casey, rental yield would be closer to 4% or even lower than 4%. So that could be one of the considered points for you when you decide which market to get in.

And in terms of a cycle position, we know that greater Melbourne is in an early phase of its current growth cycle. The five LGAs we're talking about here are the same. In the past three years, their house price actually didn't grow much. Highest three-year total growth happened in Tullamarine, which was 4. 6%.

So as you can see, Melbourne, including these LGAs, has experienced an extended correction phase. And now as market pressure builds, we're looking at accelerating growth speed. And now let's move on to Perth. Perth has grown massively over the past five years. And it's actually hard to find many markets, many submarkets still with a median house price of under $600,000.

We have to look into outer rain suburbs far from the city center. And there are three LGAs still possible. They are Armadale, Queenana, and Mandurah. Their property markets are still tight in supply. Inventory is now well below three.

And in 2025, as interest rates stayed high and the likelihood of a further interest rate cut is going lower and lower, affordability really did them a favor and maintained their high market pressure. In all of these three LGAs, inventory levels have been declining since either early 2025 or mid-2025. Sale days on market were once increasing in 2024 and 2025. But in mid-2025, the increase stopped. Declining inventory, low and stabilized days on market, meaning that these three submarkets in Perth is still facing high market pressure and potentially healthy growth in the near term.

And rental markets are also very tight in these three markets with a vacancy rate on average around 1%. The only not so good trend is in Queenana. The vacancy rate has been increasing since late 2025, possibly because of the large amount of investors and new housing supply. The vacancy rate of 0. 8% there is still indicating a very tight rental market.

In terms of rental return, these three Perth LGAs are still offering slightly better return rates compared to Melbourne's rental yields. These three Perth markets are still offering slightly better options. Mandurah rental yield is 4. 6%, Armadale 4. 9%, and Queenana 4.

85%. So 0. 5, 0. 6% higher than Greater Melbourne. Although the current market pressure is still high in these regions, it's undeniable that these three LGAs together with the whole Greater Perth market has passed the peak of their growth cycle.

So they're actually in the second half of its current growth cycle. Moving forward, there will be very healthy growth in the near term. If we're looking at three, five years total growth, they could be not as good as what the Melbourne markets would be performing. Now Brisbane. Brisbane has become expensive and the only region where it's relatively easy to find suburbs with a median price still lower or around 700,000 would be Ipswich.

Essentially, we only have got one market to choose from. Market conditions are still good. Supply is tight and is actually tightening. Inventory is now 1. 9 months of stock and it's also declining 24% lower than the same time last year.

These are markets at a extremely low 16 days, similar to the Perth affordable areas. It has increased a bit over the past year, but it was essentially increased from 15 to 16 and it is not further increasing. Rental market is also tight with a vacancy rate of 0. 6%. This vacancy rate is also declining like what's happening with the inventory.

So overall pressure in both the sales markets and the rental markets is remaining high. In terms of a rental yield, rental return rate, Ipswich is now similar to the Melbourne areas with a rental yield of 4. 1%. Not as healthy as greater Perth, but acceptable if we compare it with other Brisbane submarkets. Cycle position of Ipswich or overall Brisbane is similar to greater Perth.

Its last five-year and three-year growth has been really high. Moving forward, market pressure is not going to increase significantly further. It is more in the second half of its current growth cycle. Now we have gone through data points of the market condition of all three markets. Let's rating them based on the six metrics we were talking about.

Market options, short-term momentum, long-term stability, cycle position, rental growth momentum, and rental yield or rental return rates. In terms of market options, Melbourne has got five LGAs to choose from. That's the best among these three, so we get it a five out of five. Perth has three markets. It's in the middle, so it's getting a three out of five.

And Brisbane, as we only have one option to choose from, I would give it a harsh one. And now short-term growth. Melbourne markets, market pressure is quickly increasing. The last one-year growth was already average, and moving forward, we expect them to grow even faster. So I would give Melbourne a four out of five.

And in Perth, growth is already strong. Pressure is remaining high. The reason why I'm giving it a four instead of a five is because in some of the suburbs in those markets, supply is increasing fast, and that could impact growth in some of the pockets. And Brisbane, essentially Ipswich, is getting a five out of five because of the high and even slightly increasing market pressure in both the sales market and rental market. Now long-term stability.

Here I am talking about the economic stability. Both Melbourne and Brisbane are getting a five because their economies are well-rounded and resilient.