The month in review: Melbourne property market updates
By Herron Todd White
Potential property buyers in Melbourne have always had “location, location, location” in the back of their minds when considering the purchase of property. The question remains, how much is location really worth and what does you need to sacrifice to ensure you get a property that meets your desired location?
East Melbourne Property Market
Arguably three of the best suburbs in Melbourne’s East are Hawthorn, Kew and Camberwell. Hawthorn and Kew are both situated approximately six kilometres east of Melbourne’s CBD and Camberwell approximately ten kilometres. These historic suburbs are the exemplars of location, location, location. All consist of a blend of period homes on tree-lined streets and innovative apartments in lively positions, located in the middle of leafy parks, prestigious schools, great shopping strips and excellent restaurants, bars and cafes. Public transport is easily accessible, with several train stations amongst Hawthorn and Camberwell, as well as multiple tram routes servicing both suburbs and Kew, leading seamlessly into Melbourne’s CBD.
The current median house price in Hawthorn is $2.2175 million (PropertyData, 2019). Buyers can expect to purchase a detached period home with a land area of approximately 450 square metres. Such dwellings generally consist of three to four bedrooms, two bathrooms and two car accommodation. For instance, 16 Power Street, Hawthorn, a recently renovated Edwardian charmer sold for $2.065 million in August 2018. The property provides a generous four bedrooms, two bathrooms and two car accommodation. Although situated on a busy road, the property is in the heart of Hawthorn, surrounded by amenities, parks and prestigious schools such as Xavier College.
It really is all about location. Residents can enjoy easy access to public transport, a quick trip into the Melbourne CBD or a short walk along leafy Hawthorn Grove to enjoy Glenferrie Road’s renowned restaurants, cafes and shopping.
Recently, the unit median price in Hawthorn has decreased to $566,000 (PropertyData, 2019). This price point generally offers either an updated 1970s unit with two bedrooms, one bathroom and singlecar accommodation or a contemporary apartment with two bedrooms, two bathrooms and a car spot. The main factor for purchasers to consider is the location. Whether a student attending Swinburne University or an employee working in the CBD, Hawthorn’s units provide convenience and lifestyle over affordability. Some recent sales include 5/127 Riversdale Road, Hawthorn in November 2018 for $510,000 and 503/8 Queens Avenue, Hawthorn for $570,000 in October 2018.
Kew and Camberwell currently share similar median house prices, in which both have seen a dramatic decline in recent months. Kew and Camberwell median house prices are $1.975 million and $1.88 million respectively (PropertyData, 2019). Land sizes in Kew are on average larger than those in Hawthorn, therefore $2 million will offer an unrenovated detached 1950s or 1960s dwelling. For instance, 30 Laver Street, Kew consists of four bedrooms, three bathrooms and two car accommodation and sold for $2.055 million in December 2018.
190 Brougham Street, Kew situated on approximately 850 square metres sold for $2.1 million in February 2019 and provides five bedrooms, two bathrooms and a two car garage. The median house price in Camberwell offers a three to four bedroom detached dwelling with on average two bathrooms and two car accommodation on generous land size.
These historic eastern suburbs have a purpose for long-term living and investment. Hawthorn, Kew and Camberwell’s blend of heritage homes, contemporary architectural wonders and sleek new apartments ensure that owner-occupiers and investors are provided with the stability of purchasing in great locations. It is evident that these suburbs are not extremely affordable, however they depict that location really is everything and the benchmark for successful property buying.
North Melbourne Property Market
Current market conditions have resulted in a decrease in property values in the northern suburbs, creating the opportunity to buy into prestigious inner northern locations such as Brunswick, Northcote and Carlton.
Location, as we know, is paramount for any property purchase, and these locations are certainly the best selections of the northern suburbs. Being six kilometres from the CBD, Brunswick has its own arty vibe with the area surrounded by decorative cafes and restaurants. The close proximity of Carlton to the CBD alongside its heritage and historic buildings is what makes it a great location to live, a stone’s throw away from the Victorian Markets and shopping centres are just a small bonus. Northcote is one of Melbourne’s most famous mixed use areas and was recently named Melbourne’s suburb of the moment (Domain, 2019). Northcote is home to a diverse population with many families, young couples and working professionals.
The hunt to find a suitable property in these locations for a long term stay continues to be an issue for many people wanting to make the move, because as we know, great location comes with a big price tag. As shown, the cheapest property available in these locations will find you a two-bedroom apartment ranging from $400,000 to $500,000 in Brunswick and $700,000 to $775,000 in Carlton. You will find similar prices for apartments in Northcote, however the lowest price you will pay for a detached dwelling in the area is $1.1 million to $1.3 million.
The key factor surrounding the property in these areas is location. Purchasers wanting to live closer to the CBD within the northern suburbs but who have a price range of $400,000 to $800,000 must be willing to give up their aspirations for a spacious dwelling with large internal living areas, high number of bedrooms and land area. If the price point is out of reach for purchasers, the only way to obtain standard to superior property is to move further out north, away from the city.
However, given the property market is in noticeable decline, it may present opportunities for prices to drop even further and offer a fair entry level. 19 Horne Street, Brunswick sold for $1.55 million in May 2016 and eighteen months later sold for a loss at $1.365 million in November 2018 (RP Data, 2019). Having a loss of $185,000 and entering a volatile and declining property market, it could end up being much worse for property value going forward.
Purchasing inferior-standard property for an investment may be a great decision in six to twelve months’ time, as property prices in these sought after areas will continue to be hit hardest. If the decline does indeed push property prices further, an investment in one of these locations could yield healthy capital returns when the market corrects.
Chat with a Smartline Melbourne Mortgage Broker today.