Properties valued at over $3 million are generally considered prestige properties in the Melbourne market. Prestige properties located in the Stonnington and Boroondara area, as well as inner bayside suburbs such as Middle Park and Brighton have been highly sought after over the past year.
Suburbs to the inner east and south east of Melbourne’s CBD such as Armadale, Canterbury, Deepdene, Hawthorn, Kew, Malvern, South Yarra and Toorak have a high proportion of dwellings that sell for in excess of $3 million. Commonly referred to as blue chip suburbs, these are some of Melbourne’s earliest suburbs developed from the benefits of the 1850s gold rush and characterised by larger dwellings and small estates. Today these suburbs retain some of the look and feel of earlier times and the Victorian era, period homes, either in original condition or renovated, are extremely popular with purchasers. Contemporary, architectural residences are now common through these locales as dated, unprotected housing is demolished and replaced. The area is well serviced by rail and tram networks and retail outlets and offers a high number of prestigious public and private schooling options for families. This prestige property market continues to strengthen and experience upward price pressure over 2014 and into 2015 with Chinese buyers being particularly active in the $5 million to $10 million segment. The prestige apartment market through Melbourne’s CBD, St Kilda Road, Southbank, South Yarra, Toorak and Port Melbourne was stable across 2013 and 2014. Apartments with a point of difference are well received by the market and are generally well contested by prospective purchasers. Typically through this segment, the buyer pool is limited however this can be offset by limited stock for sale at any given time.
The average clearance rate in March 2015 was 79.5%, much stronger than the 73.7% recorded last March. It is noted that high-priced areas generally achieve better results than budget suburbs. The market is strongly driven by international, primarily Asian investors, securing property within the CBD and the surrounding well-known suburbs with prestigious schools within close proximity. The market demand for prestige properties is currently very strong and more high-priced sales are anticipated this year.
Since the RBA started to cut interest rates in August 2013, the current record low interest rate of 2.25% has sustained housing demand for local investors, while the depreciation in the Australian dollar has continued to attract foreign investment. The low mortgage rate is expected to further stimulate the existing strong market conditions. The rates are set to also attract first home buyers and local residents with self-managed superannuation funds who are looking to invest. This will strongly impact the average housing and apartment market.
The fall of the Australian dollar has generated enormous interest from foreign investors, especially Chinese property buyers as more Chinese investors want to diversify their portfolios and they consider Australia a safe and long-term investment destination. The decline in the currency is discounting Australian property by up to one-third which allows more overseas investors to capitalise on foreign currency to buy higher quality properties than their original plan.
Asian buyers are looking for properties within appropriate school zones and near universities. Within Melbourne buying property is strongly influenced by the zoning of the property in relation to the school zone requirements. Wealthy Asians and locals are ensuring they are within good school zones which are some of Melbourne’s most prestigious suburbs, including Kew and Toorak. This factor is a driver within the high end property market in Victoria.
There is an increasing amount of large developments set to begin throughout the CBD and outer popular Melbourne suburbs. Foreign investment will continue to grow with Asian developers now developing these large mixed use developments with a strong marketing presence within China. The prestigious property market will also continue to grow steadily with the Australian dollar declining, low interest rates and the appeal of Melbourne to Chinese buyers.
In early April 2015, the penthouse apartment in Australia 108 sold off the plan for a record breaking $25 million to an international businessman based in China;
7901/7 Riverside Quay Southbank, a 3-bedroom, 3-bathroom apartment in the Eureka Tower sold for $6 million in September 2014. 14 St Georges Road, Toorak. A Victorian mansion sold off market in September 2014 for $23.3 million being the highest priced home sale for 2014.
18-20 Shakespeare Grove, Hawthorn. Four-storey Avon Court with 9-bedrooms, 13-bathrooms, and 10- car garage sold for $19.8 million in May 2014.
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.