Why the Mornington Peninsula is one of the best places to invest

Even though some areas of Victoria’s Mornington Peninsula have experienced stellar price growth over the past year, there are still plenty of opportunities for investors.

The shortage of stock has meant the rental vacancy rate is extremely low with more tenant demand than supply, and some owners have been known to earn as much as $40,000 for the Christmas week from short-stay guests.

“We’re receiving a lot of interest from investors who both want to try the lifestyle and enjoy the returns from a flexible rental, whether through Airbnb or a managed holiday letting,” says Andrew McCann, managing director and auctioneer at Jellis Craig Sorrento. 

“They can attract a very good rental yield with some leased from $15,000 to $25,000 a week, say, in Portsea in January, while in some cases it’s been as high as $30,000 and $40,000. That’s probably very similar to the holiday rents in Palm Beach in Sydney.”

Those are obviously the premium properties, usually with pools and tennis courts, and contained within a compound with enough room to bring along family and friends, too.

“But it does mean you can make a very good return in peak periods but then have it to yourself the rest of the year,” says McCann, whose agency looks after 50-70 permanent rentals in the area, and about 150 properties that are available short term. 

Many investors are now looking for extra features for their property purchases to make them special, says Holly Longmuir, managing director of RT Edgar Mornington Peninsula.

That might be a Zoom room or the space for an office, so they can work when they’re in residence, or something extra with a wow factor, like a fireplace, pool or good outdoor entertainment area.

“We have a lot of crossover between those who’ve just bought and then want to rent short stay,” she says.

“Our price growth in some areas hasn’t been as strong as Sydney’s, so there’s still a lot of interest in the area. 

“While some people are looking for high-end properties, others are looking at more affordable homes in less expensive areas. The Mornington Peninsula has the luxury of being so close to Melbourne, but still has so many drawcards – great restaurants, beaches and wineries.”

But whether buying a lavish spread or a modest 1960s beach house, any investment would be quite safe, advises Michael Sier of BuyerX, a specialist Mornington Peninsula buyers’ advocacy recently awarded the REB title Buyers Agency of the Year 2022.

“Given the peninsula is landlocked and there are very tight development protocols, and a lot of holiday homes are passed down through the same family, there’s a low risk of over-supply or any rise in the number of new properties coming onto the market,” he says. 

“Also, vacancy rates are very low and the option of short stay means you can increase the rental yield, as well as having first use. It’s such a popular destination. There are some expensive areas, but if you’re looking around $1.5 million to $3 million, there are lots of options, like Rye, Blairgowrie, Somers and Balnarring.”