The month in review: Melbourne
By Herron Todd White
Some of the classic heritage styles in the inner city and inner east and south-east suburbs of Melbourne include Victorian terraces, Victorian and Edwardian dwellings, art deco units and bank houses in Port Melbourne. There are also warehouses and factories with heritage listed facades. Collingwood, Carlton, Port Melbourne, Albert Park and Middle Park are dominated by heritage protected properties.
Heritage style properties remain desirable due to their classic charm and aesthetically pleasing appearance and they represent a good investment for renovators looking to spruce up a house and sell it for profit.
With the rising amount of mid to highrise apartments being built in Melbourne, it is no surprise that developers have also targeted heritage sites in the north which offer charming facades, accompanied by new and high quality interiors.
A recent example of this is The Stables at 185 Weston Street, Brunswick East. The development of 411 apartments and townhouses across six buildings constructed on a vacant 1.2 hectare site that was the previous home of Northern Bakeries and later Tip Top Bakeries retains a portion of the original façade. The development is the winner of the 2015 National UDIA award for Excellence in Urban Renewal, the 2014 Victorian UDIA Award for Excellence in Urban Renewal and the winner of the 2014 Australian Property Institute Heritage Property Award.
$800,000 in Collingwood can get you a heritage protected 2-bedroom, 1-bathroom, 2-storey townhouse. $1,915,000 can get you a 4-bedroom, 2-bathroom, historic bank house within the Garden City Reserve in Port Melbourne.
In recent years, we have encountered a large number of renovations or extensions involving Victorian and Edwardian townhouses, with the front façade and front rooms remaining intact, but improved via paint and some renovation work, but the back half being demolished and rebuilt, occasionally adding a second level to the rear of the property.
These renovations have a tendency to be overcapitalised, mostly due to the higher than average building costs incurred for being labelled a heritage property and commonly their proximity to the city. Good gains can however be made on the sale of renovated heritage styled properties, especially if the renovation is executed well. As previously mentioned these styles remain in high demand and rarely struggle to find a new owner.
While there is large demand in suburbs such as Carlton, Fitzroy and Collingwood, we do not believe the heritage style of these properties has an impact on demand for renters. The majority of tenants would not seek out a heritage style property, but it wouldn’t deter them either. As the costs of maintenance are higher for the older properties than newer residences, the rent is usually higher, but the owners won’t find it hard to rent them out.
Prestige – Gascoigne Estate
Renovation and extensions of period homes with heritage overlays have become increasingly popular within the inner eastern suburbs. One area in particular that sees a significant amount of period homes with heritage overlays is the Gascoigne Estate located in Malvern East. Bound by Tooronga, Burke, Wattletree and Manning Roads, this estate was developed between 1880 and 1910 and is made up of mainly renovated and extended Federation, Victorian and Edwardian homes with many dwellings still incorporating the quintessential red brick
construction with timber fretwork typically seen in this era.
Current home owners and potential purchasers are drawn to the wide, tree lined streets with houses that incorporate period features with modern everyday living. The area is well serviced by parks including Central Park, shopping, schools and public transport making it appealing to a wide variety of residents.
The entire estate is covered under heritage overlay HO133 which serves to protect the regional significance of the Federation and inter-war suburban development. Any works performed on dwellings within the estate are required to retain the original façade in order to preserve the historical significance of the estate.
Many of the dwellings within the estate have been either recently renovated or extended, with only a handful of dwellings remaining in their original condition. Buyers are willing to pay a premium to secure these properties to enable them to undertake their own renovations to suit their personal style. The sale of 11 Belson Street in November 2015 for $2.71million (pictured) is an example of a dwelling in its semi original state with period detail, on an average size block of 748 square metres, which is perfect for renovation, subject to council approval. This sale price is considered to be at the higher end of the acceptable market limit for non-renovated dwellings in the area.
Many of the renovated dwellings within the Gascoigne Estate can bring in prices well into the $3 million to $4 million price bracket, depending on the quality and the extent of the renovations. Popular streets within the estate such as Finch Street, Kerferd Street and Coppin Street have no shortage of sales within this price range. Properties also don’t tend to stay on the market for extended periods of time, with the estate having selling periods of 25 to 28 days on average, demonstrating the popularity of this area amongst buyers.
Renovated dwellings within this estate are earning significant returns for home owners. The sale of 41 Anderson Street (pictured) demonstrates the capital gains to be made by home owners who undertake
moderate, non-structural renovations. Its most recent sale in October 2015 of $3.05 million is a 58% increase from its previous sale of $1.921 million in July 2010. Internal renovations were undertaken since the original sale, including a new kitchen, new flooring, paintwork internally and externally as well as new timber decking at the rear of the dwelling. With no apparent change to the structure of the dwelling, this moderate renovation has delivered a substantial gain for the previous owners.
While some dwellings have only had moderate renovations undertaken, others have undertaken significant structural renovations while maintaining the façade as per the heritage overlay applied to the estate. The sale of 57 Ardrie Road in October 2015 for $3.96 million (pictured) undertook major structural renovations since its prior sale of $1.35 million in 2007 and almost tripled its value in a little over eight years. The addition of a 3-car basement garage, an additional storey on top of the existing single level dwelling, an extension at the rear and installation of a pool in the middle of the ground floor has left the dwelling almost unrecognisable from its previous state and demonstrates the dramatic increase in value.
While some home owners or potential investors may feel restricted when it comes to renovating a period style home, the renovation trend has clearly been embraced within the Gascoigne Estate and its popularity is expected to continue in the coming years.
Melbourne’s inner west is rich with heritage and period dwellings. Victorian and Edwardian homes are prolific in Ascot Vale, Moonee Ponds, Essendon, Flemington, Footscray, Footscray West, Kingsville, Spotswood, Newport and Williamstown, while the suburbs of Essendon and Strathmore have plenty of Californian Bungalows and tiny Travancore has great examples of art deco architecture.
In addition to the particular architectural characteristics associated with a period property (whether decorative brickwork, cast iron lacework, patterned tile floors, elaborate skirtings, architraves, ceiling roses, return L-shaped verandahs, piers and balustrades or painted plaster walls with stained picture rails), land size and proximity to Melbourne’s CBD are key factors contributing to their desirability.
Price points are generally at the upper level of the local market simply because demand for period dwellings, which are in finite supply, tends to outstrip that for newer properties lacking in character. This pushes prices higher.
The impact of heritage overlays on renovations and extensions varies across different municipalities. Planning schemes regulate setbacks, roofs, fences, garages, crossovers, materials height, form, styles, paint colours and sub-division to help ensure that development is appropriate to the area.
The key to a successful renovation or extension of a heritage property is to adhere to planning guidelines and renovate in sympathy with surrounding development. While problems inherent in period dwellings such as rising damp, crumbling brick, uneven floors and walls, lack of insulation, ageing wiring and termite damage have to be factored into the renovation of these properties, significant value can be added by owners who understand the costs associated with renovating or extending heritage properties and do not over-capitalise.
A heritage overlay can have little or no impact on valuation. As all valuations start with comparison, the value of a heritage property is assessed in relation to comparable properties in the local area and in the inner west recent comparable sales evidence is generally available.
There is no great discrepancy between rentals for heritage and non-heritage properties in the inner west of Melbourne. However, the majority of renovated period properties appear to be owner occupied rather than tenanted demonstrating a preference for owners to live in their renovated property rather than viewing it as an investment property and leasing it out.
A heritage overlay may restrict development approval and seek to maintain the period appearance of a property or street. 82 Stephen Street, Yarraville, a 4-bedroom landmark Victorian property sold for $2.38 million under the hammer on 27 February 2016. On 824 square metres of land with large gardens and a pool, this renovated property dates back to 1897. The property is heritage listed and development is limited yet the sale set a record for the suburb. The median price for a 4-bedroom house in Yarraville as at December 2015 was $920,000
(Source: REIV, 2016).
Lesser known Travancore, sandwiched between the suburbs of Ascot Vale and Flemington, is home to a tightly held, small pocket of distinctive inter-war homes and apartments with leafy streetscapes. Close to the city and with reasonably large block sizes, it is a cohesive and largely intact precinct and subject to a number of heritage overlays.
Recent sales in the suburb include 173 Cashmere Street on 8 February 2016. This elevated and renovated 5-bedroom Californian Bungalow on 780 square metres sold for $2.15 million. The property is subject to an environmental significance overlay to protect the treescape on the street as well as a heritage overlay. Note: the suburb is too small for median data to be recorded.
In Ascot Vale, 6 and 8 Wigton Street sold for $2.5 million on 18 March 2016. The property is a double fronted fully renovated 5-bedroom Victorian home with a pool on one title (number 8) and a 525 square metre sized garden on the other title (number 6). Both parcels are subject to heritage overlays relating to paint controls and subdivision, demolition and construction.
The median price (December 2015 quarter) for a 4-bedroom house in Ascot Vale is $1.32 million (Source: REIV, 2016).