Melbourne’s Inner-City Suburbs Lead The Property Market Recovery: Domain House Price Report

property market report

House prices in some of Melbourne’s most expensive, inner-city suburbs have moved even further out of reach for those desperate to buy a home, with new data showing some areas soaring by as much as $400,000 in one year.

But the price gains are welcome news to vendors hoping to take advantage of the rising market.

Melbourne’s property market has now almost fully recovered the money lost over its sharp 18-month downturn in 2018 and the first half of 2019, Domain’s House Price Report for the December quarter revealed.

Domain economist Trent Wiltshire said the recovery had come much quicker than expected, with prices rising particularly fast between September and December last year.

“We’ve seen the more expensive suburbs have the fastest and biggest rebound, which has been typical of previous Melbourne recoveries,” Mr Wiltshire said.

“What’s surprising about these figures is that we saw more broad-based price rises across Melbourne and the recovery looks to be spreading out faster to the outer suburbs.”

For example, in Melbourne’s outer west Bacchus Marsh house prices jumped back by 8.5 per cent to a median of $537,000.

Melbourne’s top 10 house price rises, 2019

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But the biggest rise was near the beach in the inner-city suburb of St Kilda East, with house prices skyrocketing by 23.6 per cent, to a median of $1.3 million.

In leafy Canterbury in Melbourne’s inner east, house prices soared by 17.3 per cent to an eye-watering median of $2,715,500, a gain of just over $400,000 in one year. Meanwhile Caulfield North was up by a huge 14.7 per cent to $1.95 million.

Also making a double-digit rise was Flemington, where prices jumped by 13.1 per cent to a $995,000 median.

While house prices were up, unit prices also soared reaching a citywide record. Balwyn was the highest flyer with unit prices up by 27.9 per cent to $802,500.

Melbourne’s top 10 unit price rises, 2019

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Melbourne’s property recovery began mid-last year, boosted by assurances that tax benefits for investment properties would remain in place after the federal election, from looser lending criteria from the banks and a string of interest rate cuts.

In Flemington, north west of the CBD, the number of buyers had increased significantly since early last year, Nelson Alexander’s Jayson Watts said.

“Inquiries have been through the roof in January,” he said.

It’s good news for vendors like Brandon Truong who is selling his investment property in Newmarket Way which he has owned since 2001.

melbourne property market
Brandon Truong and his children Evan and Jaslyn at the Flemington home he is selling. Photo: Greg Briggs

The three-bedroom townhouse will be auctioned on February 22, with Mr Truong planning to use the proceeds to rebuild his family home in Wheelers Hill and re-invest in property.

“I did watch house prices increase so this has worked out well,” Mr Truong said.

Another area with strong growth was sought-after Hawthorn, where house prices were up by 11.7 per cent over the year to a median $1.9 million.

Jellis Craig Hawthorn auctioneer James Fitzpatrick said the suburb had been buoyed by families buying into the area, some of those being upsizers from nearby Richmond.

“There’s a bit of a buzz around at the moment,” Mr Fitzpatrick said. “It’s too early to get a good grasp on what will happen this year but there are more people contacting us [about selling].”

Though some inner and middle-ring suburbs results shone through in the December quarter, there were mixed fortunes for others, including in the east.

Melbourne’s top 10 house price falls, 2019

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Source: Domain House Price Report, December quarter 2019

Just seven kilometres down the road from Hawthorn in Burwood, prices plummeted by 16.2 per cent to a median of $1,047,500 – the largest drop of 2019.

Director and auctioneer with Buxton Ashburton Steve Hatzi said it was not surprising given how much prices in Burwood had risen as the market peaked at the end of 2017.

Vendors in the area were still nervous about selling, especially knowing they could not achieve as good a price as at the peak two years ago, Mr Hatzi said.

“It’s much harder to get money from the banks and the Chinese [buyer] market is not as strong now and all that is coming into play,” he said.

Melbourne’s top 10 unit price falls, 2019

property market prices

Source: Domain House Price Report, December quarter 2019

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