16 Oct 2025 Where to Buy Next? 7 Undervalued Suburbs in Melbourne to Watch
The Melbourne property market is constantly shifting, influenced by interest rates, State Government policies, and supply and demand changes. Among these movements are undervalued suburbs in Melbourne, areas where prices haven’t yet matched growing demand or upcoming infrastructure upgrades.
Often overlooked, these suburbs can deliver solid returns for investors who recognise price gaps, population growth, and long-term market performance.
Spotting these suburbs early lets buyers tap into rising buyer confidence, rental demand, and steady price growth. Whether you’re looking for median house prices under $1 million or areas set for major infrastructure investment, choosing the right location matters.
That’s where EverLend’s Melbourne mortgage brokers can help. With expert advice, flexible loan options, and support tailored to investors, working with a broker makes the buying journey easier.
Let’s explore seven undervalued suburbs in Melbourne worth your attention.
Top Melbourne Undervalued Suburbs as of 2025
1. Frankston North
Frankston North has transformed from a budget outer suburb into a suburb with serious investment potential. Located around 38 km southeast of Melbourne CBD, it’s just a short drive to Frankston Beach and the popular Bayside Shopping Centre. Improved public transport and infrastructure projects like the Level Crossing Removals nearby are boosting interest.
- Median house price: $590,000
- Median unit price: $440,000
- Capital Growth: 7.5% over the past 5 years
- Rental Yields: Approx. 4.4% for houses
- Infrastructure Development: Ongoing road upgrades and parklands
- Proximity to high-demand areas: Close to Mornington Peninsula and Frankston CBD
Ready to invest? Explore investment property loans in Melbourne in this guide.
2. Heidelberg West
Tucked just 10 km northeast of the CBD, Heidelberg West remains surprisingly affordable. With nearby hospitals, La Trobe University, and the Austin Health precinct, this suburb enjoys consistent rental demand. Add to that the ongoing Olympic Village upgrades, and it’s a suburb primed for gentrification.
- Median house price: $735,000
- Median unit price: $540,000
- Capital Growth: 6.9% over 5 years
- Rental Yields: 3.8%
- Infrastructure Development: West Heidelberg revitalisation and housing projects
- Proximity to high-demand areas: Near Heidelberg, Ivanhoe and Preston
Read more on home loan options with low deposits
3. Clayton South
Clayton South is a favourite among first-home buyers and investors. Located just 20 km from the city, it’s close to Monash University and Clayton Station, with new apartment sales and housing estates on the rise. Strong rental market and major infrastructure investment make this suburb worth watching.
- Median house price: $795,000
- Median unit price: $540,000
- Capital Growth: 8.3% over 5 years
- Rental Yields: 3.7% for houses, 4.2% for units
- Infrastructure Development: Westall Road duplication and school upgrades
- Proximity to high-demand areas: Near Oakleigh and Springvale
Looking to invest in Melbourne’s undervalued suburbs? Our Melbourne mortgage brokers help you compare, apply, and secure the right loan. Call 03 7036 3356 or visit www.everlend.com.au to get started.
4. Caroline Springs
Known for its lakes, green spaces, and family-friendly vibe, Caroline Springs offers good value in Melbourne’s west. It’s seen steady population growth, and the West Gate Tunnel project is set to improve travel times to the CBD significantly. Good schools and parks add to its appeal for long-term residents.
- Median house price: $720,000
- Median unit price: $485,000
- Capital Growth: 7.1% over 5 years
- Rental Yields: 4.0%
- Infrastructure Development: West Gate Tunnel and local retail expansion
- Proximity to high-demand areas: 25 km from Melbourne CBD, near Sunshine
Check out our guide on construction loan options for property upgrades.
5. Heidelberg Heights
A neighbour to Heidelberg West, this suburb is experiencing a wave of development. Boutique townhouses and new apartments are popping up, attracting young professionals and investors alike. With proximity to healthcare hubs and education, it’s a classic example of a suburb on the rise.
- Median house price: $890,000
- Median unit price: $570,000
- Capital Growth: 7.8% over 5 years
- Rental Yields: 3.9%
- Infrastructure Development: Upgrades to Darebin Creek Trail and nearby campuses
- Proximity to high-demand areas: Near Ivanhoe and Northcote
6. St Kilda East
Often overshadowed by its flashier neighbour St Kilda, this suburb has plenty to offer at a lower median price. Character homes, leafy streets, and excellent public transport access make it ideal for renters and first-time buyers. Investors are attracted by strong auction clearance rates and a stable vacancy rate.
- Median house price: $965,000
- Median unit price: $620,000
- Capital Growth: 6.5% over 5 years
- Rental Yields: 4.1% for units
- Infrastructure Development: Light rail upgrades and local retail development
- Proximity to high-demand areas: Next to Balaclava and Windsor
7. Yarraville, Seddon, Footscray
This vibrant inner-west pocket blends heritage homes with funky cafes and retail strips. The Yarraville-Seddon-Footscray triangle has seen a lot of media buzz lately, but prices still lag behind inner-north equivalents. West Gate Tunnel upgrades and improved train services make this a no-brainer for buyers looking for off-market opportunities.
- Median house price: Footscray – $890,000, Yarraville – $950,000
- Median unit price: Around $530,000 across all three
- Capital Growth: Avg. 7.9%
- Rental Yields: 3.9%
- Infrastructure Development: West Gate Tunnel, Footscray Hospital, Highpoint upgrades
- Proximity to high-demand areas: Close to CBD, Kensington, Docklands
Sources: Realestate.com.au, Domain, Victoria Government, SQM Research. Please note that property prices tend to fluctuate over time; hence, it’s always best to consult with a real estate agent for the latest market values.
Looking to invest in Melbourne’s undervalued suburbs? Our Melbourne mortgage brokers help you compare, apply, and secure the right loan. Call 03 7036 3356 or visit www.everlend.com.au to get started.
FAQs
What does it mean when a suburb is undervalued?
An undervalued suburb is one where property prices are below expected levels, often due to overlooked infrastructure or rising demand not yet reflected in prices.
Are Melbourne’s western suburbs a good investment?
Yes, suburbs like Caroline Springs and Footscray are attracting strong investor interest thanks to new infrastructure and affordable prices.
How do I finance a property in an undervalued area?
Speak with a mortgage broker like EverLend to explore tailored loan options, including low-deposit and investment loans.
What factors make a suburb undervalued?
Look at capital growth, infrastructure upgrades, rental demand, and median property price compared to nearby suburbs.
Which suburb has the highest rental yield under $800k?
Frankston North and Clayton South both offer rental yields above 4%, making them attractive for investors.
Are infrastructure projects a good indicator of future growth?
Yes, major projects like the West Gate Tunnel can significantly boost surrounding real estate prices.
Can I buy with no deposit in Melbourne?
Yes, EverLend offers home loans with no deposit under certain conditions. Speak to our brokers for eligibility.
Final Thoughts: Why It Pays to Keep an Eye on Undervalued Suburbs in Melbourne
In a shifting property market, identifying the right suburb is half the battle. Each of these undervalued suburbs in Melbourne presents a smart opportunity for investors and homebuyers alike. From capital growth potential in Heidelberg Heights to strong rental market yields in Frankston North, these locations offer a mix of affordability, lifestyle, and long-term upside.
If you’re considering entering the Melbourne market, let EverLend’s Melbourne mortgage brokers help you take the next step. Whether you’re looking for interest-only home loans, assistance with refinancing, or simply need expert insight into your buying potential, our team is here to guide you through every step.
Visit www.everlend.com.au or call us today on 03 7036 3356 to book a free consultation and explore your options. Start building your property future, one smart suburb at a time.