Double-value delight for Melbourne suburban hot spots
PROPERTY generally doubles in value in a decade but for a handful of Melbourne suburbs it took only half that time.
Hayley Goddard
Herald Sun Real EstateNOVEMBER 27, 201711:02AM
14 Mountain St, South Melbourne sold for $1.95m in September 2017. It last changed hands for $991,000 in Sep 2009.Source:Supplied
PROPERTY generally doubles in value in a decade but for a handful of Melbourne suburbs it took only half that time.
Six suburbs in the city have more than doubled their median house price in the past five years, CoreLogic records show.
They far exceeded the citywide median house price growth of 44.1 per cent for the period.
Parkville is the king of the pack, with its median house price up 138.5 per cent to $720,000, in the five years to August 2017.
It was closely followed by South Yarra, which grew 137.9 per cent.
Jellis Craig, South Yarra, auctioneer Nathan Watersun attributed the huge lift in prices to a rejuvenation of cottage houses, city living and improved amenity in the area.
“There has been a revival on Toorak Rd in terms of cafes and restaurants which has brought lifestyle amenities,” he said.
108 Park Drive, Parkville, sold for $5.6m in October 2017.Source:Supplied
Here are Melbourne's top performing suburbs.Source:Supplied
“The rejuvenation of cottage homes and city living (has meant) a lot of money in renovations.
“It is a beautiful part of the world, everything is at your doorstep. From a lifestyle point of view it doesn’t get any better.”
Mr Watersun said the battle to get into good primary schools had also pushed up prices.
An example of a good sale in the suburb was 64 Mason St, a renovated three-bedroom house that sold for $3.075 million to a first-home buyer who did not want to commute to the city from his family home in Wantirna.
CoreLogic records show the then single storey terrace changed hands for $981,000 in March 2013. An extension building permit for an estimated $329,000 was granted in December of that year.
CoreLogic head of research Cameron Kusher said most of the top five performers were close to the city and already had high prices five years ago.
63 Beauford St, Huntingdale. Sold for $1.19m in August 2017Source:Supplied
“It highlights the fact that demand has been strongest in those blue chip areas of the city, which is why they have had the strongest growth,” he said.
“It really shows the strength in the Melbourne housing marking in the last five years.
“All of these areas would be serviced by trams and trains so there is the option to commute to the city, and a lot of them have that high street with amenities close by such as restaurants and cafes — all of those factors are really big drivers of demand.”
Mr Kusher said “really strong” population growth meant more people in the city, increased traffic congestion and therefore more demand for housing closer to the city.
However, those wanting to escape the rat race were contributing to property price growth in Flinders, which came in fifth on the top performing Melbourne suburbs, Mr Kusher said.
Frank Valentic, of Advantage Property Consulting, said Melbourne’s population growth contributed to a “phenomenal” 12 months of capital growth, which had pushed up the five-year average.
The striking interior of 64 Mason St, South Yarra, which sold for $3,075,000 in November 2017.Source:Supplied
On average, Melbourne welcomes about 100,000 people to the city a year, which skyrocketed to 148,000 in the past year, Mr Valentic said.
“The capital growth is unprecedented — I haven’t seen growth like that in any other five-year period (of the 22 years) I have been in real estate for,” he said.
“Six of the top 10 were middle to outer suburbs (almost 20km from the city).
“Historically, you would have seen that growth dominated in the suburbs 3km to 8km from the city but the baton is being passed on to middle and outer suburbs.”
Mr Valentic said because interest rates had not increased in the past seven years there was confidence in the market place, which had contributed to more buyers.
He said overseas buyers had also driven up prices.
Before: 64 Mason St, South Yarra’s facade prior to the renovation. It sold as a single-level home in February 2013 for $981,000.Source:Supplied
After: 64 Mason St, South Yarra, as it looks now. It sold for $3,075,000 in November 2017.Source:Supplied What does the future hold?
Mr Kusher did not believe Melbourne would continue to grow at the rate it had for the past five years.
“I don’t think another five years like that is sustainable,” he said.
“You’re talking about homes above $1m in all of these areas — the ability to afford (property) will impact these suburbs.
“In the next five years we will see a slow down in Melbourne but for these suburbs that are desirable we will always see demand for them.
“I think they are likely to outperform the broader market but I highly doubt these suburbs will continue to grow (at this pace). If that was the case St Kilda would have a median house price over $5 million. I just don’t see that happening.”
Mr Watersun agreed the growth would continue, but was not sure at what rate.
“The dynamics are there to continue to grow, especially in suburbs with great infrastructure and amenities in the area,” he said.
The higher growth is likely to be felt in the outer suburbs, Mr Valentic said.
“If there is going to be growth it will be in the outer suburbs. When the inner market gets too high and people can’t afford it they move out,” he said.
“The ripple affect will favour the next suburbs out, the suburbs that lag behind.”
“The market (usually) goes up 30 to 50 per cent in five years — that has been the average for decades — but this growth of 25 per cent a year is not sustainable.”
