Best Suburbs in Melbourne for Small Property Developments (2026)

https://www.youtube.com/watch?v=dFOMCpSgf1s

Let me say this upfront because it might annoy a few people.

If someone gives you a list of the “best suburbs in Melbourne for small developments” without explaining why… That list is basically useless.

Because the real edge isn’t the suburb. It’s understanding what actually makes a suburb work, so you can spot the next one before everyone else piles in.

So today I’m going to do two things.

I’ll share five suburbs we are actively developing in right now, And more importantly, I’ll walk you through the exact logic behind why they work.

If you understand the logic, you won’t just copy this list. You’ll be able to apply it and build your own, wherever you are in Australia, which is exactly how to start property development the right way. Before we get into suburb names, there’s one thing I need to be clear about. There is no universal “best suburb”.

When we work with clients, narrowing down suburbs is a process. It comes down to budget, risk tolerance, the type of development, the end goal, and how long you plan to hold the property. All of that matters.

So, what you’re about to hear is a macro view. It assumes a reasonably flexible budget and a focus on small developments, like townhouses, in suburbs that hold up in bad markets and tend to move first in good ones.

These aren’t cheap suburbs. But they are resilient suburbs. And that’s the trade-off. I’ll run through the five, then I’ll tie them together with the common thread so you can spot others like them.

Quick side note before we jump in. We run Australia’s number one free property developer network called the Little Fish Network. There are thousands of developers in there helping each other every day.
It takes two minutes to join.

Alright, in no particular order, the first one is McKinnon.

1. McKinnon

McKinnon is an absolute weapon of a suburb for small development.

It sits in Glen Eira, surrounded by Bentleigh, Ormond, and Bentleigh East. The land is mostly flat, and that matters more than people realise because flat land keeps build costs under control.

The planning rules here are generally workable, and there aren’t many restrictions getting in the way.

But the real driver in McKinnon is the McKinnon Secondary College school zone.

That school zone is extremely sought after. Families are willing to pay more to get into it. Renters will pay more to stay in it. And buyers are happy to pay a premium because of it.

Here’s the part property developers really like. When the market slows down, McKinnon tends to hold its value. And when the market turns, it’s often one of the first suburbs to move again. That gives you protection on the downside.

You’re not guessing where demand is coming from. You’ve got strong rental demand and strong resale demand built in.

The second Melbourne suburb I want to talk about is Hampton.

2. Hampton

Hampton works because people really want to live there, and there just aren’t many opportunities to build new homes. It’s a Bayside suburb, so you’re close to the water. You’ve got train access, good schools, and it’s surrounded by suburbs like Brighton and Sandringham.

All of that creates strong demand, but supply stays tight. Now, Hampton is a fairly big suburb, so you do need to be careful. The closer you are to the village and the beach, the more expensive it gets. If you move a bit further inland, that’s where opportunities start to open up.

One thing that’s changed recently is that Bayside has become easier to develop in, thanks to planning changes that came through in 2025. That’s made projects here more achievable than they used to be.

And here’s an angle a lot of people overlook. Downsizers.

People who’ve lived in Hampton for decades on large blocks often don’t want apartments. They want a brand-new townhouse, low maintenance, but still in the suburb they know.

At the same time, you’ve got younger families chasing the Bayside lifestyle without paying full Brighton prices. So, you end up with two very different buyer groups competing for the same type of product.

And from a property development point of view, that’s exactly what you want.

The third suburb we’re actively developing in is Doncaster East.

3. Doncaster East

Doncaster East is a very different play to suburbs like McKinnon or Hampton, but it’s a powerful one if you understand what you’re buying into.

First, location-wise, it’s in the Manningham area, and it’s got really good road access. You can jump straight onto the Eastern Freeway and be in the city without fighting local traffic, which matters a lot for families where multiple adults are working.

The other big driver here is schools. There are a couple of highly regarded public schools in this area, and that alone creates constant demand.

What that does is attract families who don’t just buy as one couple. Parents, adult children, and sometimes grandparents all chip in together. When people buy like that, they can afford bigger homes, and they’re not interested in small or cramped designs.

That’s why you see strong demand here for larger, well-designed townhouses or homes, rather than tiny developments trying to squeeze too much onto a block.

From a twonhouse building point of view, the rules here are generally reasonable. You’re not fighting heavy restrictions like you are in some inner suburbs, so projects can actually make sense on paper.

The big thing you must watch though, is the land itself.

A lot of Doncaster East sits on hills. Blocks on steep slopes might look cheaper at first, but they’ll absolutely chew through your budget once you start digging.

Excavation, retaining walls, and extra engineering can wipe out your profit very quickly. If you find a block that’s relatively flat, though, everything changes.

Suddenly, your build costs are more predictable, your designs work better, and the end product appeals directly to the buyers who already want to live in the area.

That’s why Doncaster East has held its value through downturns and why resale prices have quietly kept improving over time. When you get the fundamentals right here, it performs far better than people expect.

Suburb number four is Carnegie.

4. Carnegie

Carnegie is one of those suburbs that just keeps doing its job quietly. We’ve worked in this area for a long time, and it consistently performs because it ticks a lot of boxes at once.

It’s in the Glen Eira council again, which matters because that council has generally sensible planning rules. The land is mostly flat, which keeps build costs under control.

You’ve got a train line, a busy shopping strip, good road access, and Chadstone, Victoria’s biggest shopping centre, just down the road.

All of that creates demand before you even talk about schools. Now, part of Carnegie sits inside the McKinnon Secondary College school zone, which definitely helps.

But what’s important here is that even outside that residential zone, people still want to live in Carnegie. The reason is the feel of the suburb.

When you drive through Carnegie, it feels greener and calmer than a lot of nearby areas. You see tree-lined streets, older character homes, and plenty of parks. Buyers pick up on that straight away.

That’s why people who get priced out of other premium suburbs such as Caulfield or Malvern East often end up here. And they don’t feel like they’ve settled for a second-best option. They feel like they’ve found a smart alternative.

The rules generally allow sensible townhouse projects, restrictions are manageable, and when you finish the build, there’s a deep pool of buyers and renters ready to step in.

From a property development point of view, that’s exactly what you want. It’s not flashy, but it’s reliable. And reliability matters a lot in development.

The fifth and final suburb before I break down the common thread that makes all of these suburbs work is Brighton East.

5. Brighton East

Brighton East is basically the smart alternative to Brighton, which is a beautiful suburb, but it’s tough to work in. Prices are high, and there are a lot of planning rules that make development harder than it needs to be.

When you move just one suburb back into Brighton East, things open up. The blocks are generally more usable. There are fewer restrictions getting in the way. And while prices are still premium, they actually make sense for property development.

You’re still in Bayside, and you’re still close to the water and still near some of the best public and private schools in Melbourne. Another big advantage here is the land itself. A lot of Brighton East is relatively flat, which makes designing and building much easier and more predictable.

That means you can usually build a slightly larger, better-designed home without constantly fighting planning rules or blowing the budget.

Families love Brighton East because they get the Bayside lifestyle without the full Brighton price tag.
Property developers like it because projects are more straightforward and the end product is easy to sell.

That combination is exactly what you want as a property developer.

The Common Thread

Now, this is the part most “best suburb” articles completely miss. When people search for the best suburbs for property development, they usually want a simple list. But the real value is understanding why certain suburbs work in the first place.

All of these suburbs work for the same basic reasons.

People are willing to pay more than they planned to live in these suburbs. They’ve got schools, lifestyle, and infrastructure that just don’t exist in a lot of other suburbs.

And because they are older areas, there are also limited new housing developments coming into these areas. You’re not competing with endless new estates or massive oversupply.

And when the market slows down, these suburbs tend to hold up better than average. When things turn around, they’re often the first to move again.

But here’s the important part. Choosing the best suburbs for dual occupancy projects is only the starting point, especially if your goal is developing property for profit. That’s when the real work begins.

Things like how the street feels when you stand on it. The shape of the block. Which way the land faces. Whether it’s flat or sloped. And how close it is to trains, shops, and schools.

Those small details inside the suburb are what decide whether a project works or not.

That’s where developments are won or lost. And that’s how to make money from property development consistently over time.

Wrapping Up

So those are my top five suburbs to look at for small developments going into 2026.

They’re definitely not the cheapest suburbs in Melbourne. But they are some of the safest places to develop, where the numbers actually make sense.

If you’re looking for the next wave of cheaper, emerging suburbs, that’s a different conversation.
And we’ll cover that in a future article, so make sure you’re subscribed so you don’t miss it.

But if your goal is resilient projects with strong resale and rental demand, These five suburbs are very hard to beat.

If you got value from this article and if you want even more support, I offer one-on-one property development mentoring, full project management, and even buyer’s advocacy to help you find the perfect site for your new build. You can book a call directly with me anytime.

And make sure you’re inside the Little Fish Network, it’s free, it’s full of experienced dual occupancy builders and developers helping each other every day.

Filled under: All Developer Insights Property Investment