By Herron Todd White
Melbourne’s suburbs are extremely diverse with the inner suburbs boasting some of the most expensive properties in Australia and the outer growth regions providing some really affordable properties. Everyone is always looking to improve; whether it be moving on from renting to owning your first home, upgrading to a larger family home or finding your first investment property, the property market is on most people’s minds. Everyone has a different price range in which they’re looking, however $700,000 is often an achievable and sought after number for many and close to the median price. The difference in the quality of the property you can buy within this range is significant and it all comes down to the location. We’ve broken down Melbourne’s different regions and provided some insight on what you can expect for the $700,000 price range.
With current market conditions and in light of the recent events of COVID-19, a lazy $700,000 can go a long way in areas of Melbourne’s CBD and city fringe suburbs. Recent figures show that the median unit price for the CBD, Southbank and Docklands were $480,000, $575,000 and $609,000 respectively. It is truly a buyer’s and renter’s market for those looking in these areas.
The global pandemic has definitely shaken up the rental market in the CBD and fringe suburbs. Many tenants are international students unable to fly back into Australia due to travel restrictions, resulting in a spike in vacancy rates. This has left landlords nervous as this may cause a strain on their mortgage repayment ability for the property.
We are also seeing quite a number of nomination sales in the CBD market. A nomination/nominee sale is when someone who has purchased a property can transfer to another purchaser or nominee prior to settlement. When a purchaser cannot settle, the purchasers will be given the opportunity to find a new purchaser to have the contract transferred in their name and finalise the settlement. This generally happens due to the buyer not having access to funds to settle (mostly due to banks not approving loans or other government restrictions for capital outflow). With Coronavirus also impacting the rental market, purchasers of these properties have less incentive to settle on these apartments, which will also result in them forfeiting their original deposits.
Inner and Outer South East
Residential dwellings in the outer south-eastern suburbs such as Officer, Clyde and Berwick fall within the $700,000 budget. These suburbs offer plenty of choices for those looking to buy as there are many newer estates in these areas. A brandnew house and land package can range from $500,000 to $650,000.
Latest figures show that the median house prices for Officer, Clyde and Berwick are $557,000, $566,500 and $687,000 and depending on the size, location and specifications, can generate rental yields of 4.5 per cent, 3.71 per cent and 3.1 per cent respectively. The recent crisis has rocked buyers’ confidence, with many facing issues of job security. The government has since introduced a new Home Builder Scheme for those looking to either build a new home or renovate, as homeowners will be given a $25,000 incentive which has been designed to boost the construction industry as it recovers from the effects of COVID-19.
House and land packages in these urban growth zones are attractive to first home buyers and young families as they allow flexibility in designing homes to cater to their individual needs.
In more established areas such as Cheltenham, Oakleigh and Mentone, housing prices start from $960,000 for houses and $600,000 for units. These areas in the south-east generally yield high sales and rental prices as they are among the most sought after suburbs to live in as they are generally close to public transport, major shopping centres and the CBD.
Inner and Outer East
Residential pockets within the inner eastern suburbs historically yield high sale and rental prices. Suburbs such as Richmond, South Yarra, Toorak, Camberwell, Hawthorn and Kew all have high median residential house prices and equally high median prices for apartments. The areas of the eastern suburbs that would be best suited for someone with a budget of $700,000 begin further down the Lilydale train line, near places such as Ringwood, Warrandyte, Mitcham and Doncaster. These areas have a good mix of established residential housing, emerging housing markets seen in land developments such as the Tullamore Estate in Doncaster and new single or multi-unit dwelling developments taking place in various suburbs across the eastern suburbs. Some comparisons of median house prices in eastern suburbs are shown below.
Mooroolbark is a very suitable suburb in which to invest for someone with a budget of $700,000. The suburb is situated close to major shopping centres with Eastland a short drive away, access to public transport commuting into the city and the market that is available in Mooroolbark. The varying quality of homes in the area makes it possible for investors to either buy and renovate, buy and knockdown or purchase an established home ready to move into or rent out to tenants. We are of the opinion that these outer eastern suburbs are a great location to invest in property, whilst being affordable and having opportunities to construct new dwellings, renovate older homes or purchase a home suitable for living.
Inner and Outer North
Residential dwellings in the inner and middle north suburbs such as Brunswick, Coburg, Northcote, Essendon and Preston are generally priced out of the $700,000 budget given that the median house prices in these areas surpass the $1 million mark. Consequently, we are required to limit our search to strata properties including units, townhouses and villas.
Moving further out into suburbs such as Glenroy, Fawkner and Reservoir where median house prices are currently closer to the $700,000 mark, we can expect to see a number of two- and three-bedroom dwellings appearing within reach, particularly those in need of renovation.
Finally, in the outer north, suburbs including Epping, Wollert and Craigieburn where current median house values are under the $600,000 mark, large homes with higher specifications, sizeable blocks and four or five bedrooms become possible candidates.
As it appears that the recent health pandemic is having minimal impact on values in the inner north – in part due to the lack of stock and current demand – we would be inclined to invest in these areas as properties are still selling within normal market parameters. Given that we are limited to strata properties in these areas with a spend of $700,000, we would suggest a preference towards those that are part of smaller developments such as townhouses rather than large, multiunit developments. There are a number of twobedroom, two-bathroom townhouses in Brunswick East that fit the bill perfectly.
Investors can expect reasonable returns on strata properties in these areas. Modern, twobedroom, two-bathroom apartments can achieve approximately $450 to $500 a week while villa units with two bedrooms and one bathroom achieve approximately $380 to $420 a week.
We believe that performance in this price sector will remain stable in the short to medium term and given the current state of the market, buyers can and should remain confident.
Melbourne’s western suburbs have rapidly evolved over the past ten years. Melbourne’s housing market has always seemed somewhat unattainable for many, however figures released have shown that Melton and Wyndham are affordable and desirable options with larger blocks of land and bigger homes.
The city of Melton is proving a popular choice according to realestate.com.au. It is also the cheapest suburb in Melbourne, with a median price of $390,000.
Those looking for large blocks and new modern houses could consider Rockbank, Caroline Springs and Plumpton at a median price of $700,000, which is an attractive choice for first home buyers and families. Melbourne’s western area is spoilt for choice around the $700,000 mark compared to that of more expensive inner Melbourne suburbs where purchasing a nice home in that range is simply not possible
The Australian dream of a big home and backyard is attainable in the western suburbs. It is an area that is affordable and ever developing which is why it has attracted so many first home buyers and investors looking to break into the property market. The convenience of being close to the city combined with the benefits of not actually being in the heart of the city has rapidly increased its population growth.
Some examples of what you can expect around the $700,000 mark are as follows.
Compare this to a well-established, higher socio economic region within Melbourne’s west such as Williamstown. It is considered much more difficult to obtain a nice house for the $700,000 price bracket within this region as the median house price is $1.35 million. Realistically, only small units and apartments in Williamstown can be purchased for this price. An example of what you could expect is as follows.
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DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.