Melbourne is the most liveable city in the world, according to the EIU, but rising property prices mean that the high quality of living could soon be matched by the cost. For local buyers, the increasingly expensive housing means that renting property is a convenient solution. For investors, both domestic and international, demand for rental accommodation means that buy-to-let is a lucrative opportunity.

With rental yields weakening thanks to climbing prices, where is the best place to invest? We compare the size of each private rented sector (in terms of share of households) and the median apartment price to round up the 10 most affordable – and therefore most profitable – Melbourne suburbs for investors.

Carlton

Price: $276,000

Private rental share: 65%

The city’s Italian quarter is a popular hub for students, which help to give it the city’s biggest private rented sector, making up almost two-thirds of the households in the suburb. With residents from both Australia and abroad, this is ideal buy-to-let territory.

Melbourne

Price: $337,500

Private rental share: 63.1%

The heart of Melbourne is home to the city’s central business district, which means that it is a focal point for all workers hunting for a place near to the office. A fast-growing population and a lot of studio apartments in a small space gives the suburb the second largest private rented sector in Melbourne. Prices are notably higher than Carlton, but demand from tenants is equally strong.

Southbank

Price: $492,500

Private rental share: 58.9%

One of the more affluent zones of Melbourne, Southbank’s average apartment price skews close to half a million dollars. As a cultural hub with new developments springing up, though, the rental market is summed up by the 92-storey Eureka Tower: extravagant, but too big to dismiss.

Parkville

Price: $490,500

Private rental share: 56.8%

Located close to the CBD and home to the impressive Royal Park, Parkville is a pricey part of Melbourne. With university and medical institutions both in the suburb, though, tenants still outnumber private owners, as convenience compensates for the higher costs than neighbouring Carlton.

West Melbourne

Price: $521,500

Private rental share: 56.7%

Largely an industrial zone, West Melbourne is not at the top of a flat hunters’ wish list, but its proximity to the CBD (2 miles) and array of terraced housing make it a potentially profitable option for landlords, as private renters outnumber property owners.

South Yarra

Price: $416,250

Private rental share: 56.3%

South Yarra is one of Melbourne’s top shopping districts and is also home to some of the wealthiest homeowners in the city. Nonetheless, the private rented sector still makes up over half of the property market.

East Melbourne

Price: $448,500

Private rental share: 55.4%

East Melbourne is home to many parliamentary and local authority buildings, which makes it a sought-after area for official employees. Despite some wealthy households, there are a large number of apartment blocks in the area, which are popular among its sizeable rental population.

North Melbourne

Price: $471,000

Private rental share: 48.6%

North Melbourne has become gentrified over the years, thanks to its proximity to the CBD. A growing migrant population and a strong supply of new housing has seen its rental population expand too, making up almost half of the market.

Kensington

Price: $404,500

Private rental share: 38.9%

Kensington’s property market is as diverse as it comes, from industrial and commercial property to an array of new houses and social housing flats. The population is growing slowly, with a small number of students in the area, but with house prices on the up, renting is not an uncommon choice among its professional residents and families.

Flemington

Price: $312,000

Private rental share: 33.7%

Flemington is home to a flourishing migrant population, with many looking to rent as well as purchase a home. The size of the rental market is far below that of Carlton or Parkville, but the area’s low apartment prices make it a suburb worth considering for budget buy to let investors.

This article was written by Dan Johnson and was originally published on realestateview.com.au. Dan is the founder and owner of TheMoveChannel.com and LeadGalaxy.com.