« Back to Blog
More In The Millions: Affordability & The Melbourne Property Market
May 12, 2014
Property made plenty of headlines in the first months of this year, with the Melbourne market still growing, more suburbs joining the million-dollar club and property yet again proving itself a great investment.
For those trying to get a foothold on the property ladder or to upgrade their home headlines with words such as “boom” would have been a dismal sight. But the good news is there are still plenty of affordable homes in Melbourne and across the state. And though the market is still growing, with a question mark over the state’s economy there are signs growth is slowing.
Prices Growing – but Not As Fast
City house prices continued to grow in the first months of the year, although not as much as in the final months of last year. The city’s median house price of $652,500 was up 3.7 per cent in the March quarter, compared with the December 2013 quarter. This was lower than the 5.3 per cent growth in the December quarter and 9.1 per cent in the September quarter last year.
Some of the city’s big-name, leafy eastern and bayside suburbs are, unsurprisingly, among its most expensive – Balwyn, Balwyn North, Surrey Hills, Toorak, Camberwell, Brighton and Brighton East, for example.
All types of Melbourne property increased in price, but it was outer suburban apartments and three and four-bedroom family homes which were the stand-out performers. The $540,000 median price of a three-bedroom house was up 3.1 per cent in the quarter and a four-bedroom house the $683,000 median was up 4.3 per cent for the quarter.
Camberwell, Ferntree Gully and Balwyn North had the quarter’s highest price growth for four-bedroom houses. The hot growth spots for three-bedroom homes were Glen Waverley and Balwyn, highly sought-after for their school zones, as well as Ringwood East and Wantirna South.
The price of smaller homes in the inner city rose more slowly than in the middle and outer suburbs – likely because of the increased supply of apartments there. A one-bedroom apartment in inner Melbourne increased by just 1.7 per cent in comparison to 2.3 per cent in the middle suburbs and 7.8 per cent in the outer suburbs.
The Million Dollar Club
Melbourne’s million dollar club now has 17 members – suburbs with a median house price of more than $1 million. The number of suburbs with a median higher than $1.5 million and $2 million was also up in the first three months of the year.
Just as last year’s strong final quarter pushed new suburbs onto the million dollar list, including Fitzroy North and Ashburton, more joined in the first months of 2014. Bentleigh topped the $1 million mark for the first time with a median price of $1,050,000, up from $995,000. Templestowe, with a $1,033,000 median, up from $964,000 also joined the club.
Melbourne’s most expensive suburb remains Toorak, with a median house price of $2,430,000 – that’s actually down from $2,875,000 in the last quarter. Last quarter its median was boosted by several sales worth more than $3 million. Second was Kew, with a $1,944,000 median, up from $1,700,000.
Of course having a million-dollar median doesn’t mean all the houses in the suburb are worth that. Medians are a valuable starting point, but individual factors – location, quality and size, for example – may mean a home is worth more, or less.
On the outer
Price growth was strongest in the outer suburbs for all apartment sizes and for two-bedroom homes. This is partly because buying there is cheaper than in the inner city. But also the mix of property types in the outer suburbs is changing, with a move from estates of large homes only to apartment and townhouse-building.
Others are opting to live where they can buy more space than an inner city block offers. Werribee, for example, with excellent train links, had a median house price of just $315,000, with 25 per cent of its sales less than $290,000. But that median grew by 7.2 per cent in the year to the end of March.
Is There Anywhere Still Cheap?
Can you still buy a cheap house in Melbourne? The answer is certainly yes. There are still many affordable suburbs in the city which offer a foothold in the property market and have the potential to increase in value.
In Melbourne’s cheapest suburbs such as Melton it is still possible to buy a house for less than $300,000 and several suburbs, including Frankston North, Melton South and Millgrove, recorded a median below $250,000 in the March quarter. In Melton South the median house price was just $222,500.
In Melton West, with substantially more sales, the median was $290,000. And although Cranbourne just tipped over the $300,000 mark with a median of $313,750, 25 per cent of all sales in the suburb were for less than $291,250.
Some buyers may assume buying here means ending up with a dump, but that isn’t so. Many of these suburbs have quality homes, but their distance from the city centre has meant slower price growth than suburbs closer in.
With interest rates still at record lows these low median prices show that home buyers willing to be flexible about where they buy can still find a bargain.
Buyers researching their home purchase, or those interested to discover out what’s happening in their suburb can check out this median house price data free at www.reiv.com.au Just click on a suburb on the map and all the information about it will appear.