Prospective homeowners are quickly realising that a budget of $1 million – an inconceivable amount of money for many Australians – will not take them very far in Melbourne.
There are now more than 100 Melburnian suburbs with a median house price of more than $1 million, according to Andrew Wilson, Domain Group’s chief economist. In 2006, just five suburbs were members of Melbourne’s “million dollar club”: Toorak, East Melbourne, Canterbury, St Kilda West, and Brighton. This year, many of the newly minted million-dollar suburbs can be found in the eastern part of the city.
Notoriously expensive suburbs like Toorak and Hawthorn may have the most expensive houses, but it’s Melbourne’s smallest pockets that now boast the highest entry prices. Last year, not a single townhouse or house changed hands for less than $1m in Gardenvale, Kooyong, Princes Hill, Deepdene, and Warrandyte South, according to the Domain Group.
In 2016, a buyer in Kooyong paid $1.29m for the cheapest townhouse sold in that suburb that year. The property was an unrenovated two-bedroom at 6/1 Monaro Road. Number 4, a similar townhouse on the same block, was sold about a year earlier for $920,000.
Justin Krongold, a sales associate at Marshall White, resold the property at number 4 for $1.53m in December. He acknowledged the growing demand for unrenovated homes in the area. “It used to be difficult [to get buyers interested in Kooyong] … people thought it was a sleepy suburb, [for] a little more mature clientele, very Toorak-orientated,” he said. “Now I think younger people [and] professionals are seeing value in that pocket.”
As for Gardenvale (situated 10km southeast of Melbourne’s CBD), its smaller footprint means sales are less frequent. However, when sales do push through, prices don’t dip below the million-dollar mark. While there were only six house and townhouse sales in Gardenvale last year, the cheapest was $1.3m for a three-bedroom house at 90 Gardenvale Road.
Buyers interested in Gardenvale would need a budget of between $1.1m and $1.2m for an entry-level townhouse on their own title, according to Bill Stavrakis, director of Biggin and Scott Elsternwick. And with competition among bidders intensifying this year, Elsternwick said prices for Gardenvale’s most highly coveted houses could easily surpass two million dollars.
Skyrocketing prices are pushing prospective house buyers further and further away from the city proper, and with house prices predicted to continue their upward trajectory, things are only going to get worse for those without deep pockets.
“It’s another sign of higher prices, particularly in the inner-suburban areas where you can’t get into the market at all under $1 million,” Wilson said. “Toorak now has a median house price just under $4 million, and that’s a 30 per cent increase over the year.”
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