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Dear Fellow Property Investor,
It was lockdown’s hottest ticket: a home with easy access to the local beach, within five kilometres or less.
Property prices have skyrocketed as much as 30 per cent in Melbourne’s bayside suburbs over the past year, Domain figures show, as inner-city families moved further out in search of space to work from home and drawcards such as beaches and parks.
The trend has been a boon to home sellers, who are pocketing the gains to upgrade or make their own sea-change.
Black Rock recorded the highest house price growth in Melbourne at 30.6 per cent over the 12 months to December, to a median $2.35 million, the latest Domain House Price Report shows.
That’s excluding the Mornington Peninsula, where prices have soared even further.
The second- and third-biggest movers in the city were Mentone and Frankston South, where prices are up more than 29 per cent each.
The effect holds from inner bayside’s Albert Park (up 24.1 per cent) and St Kilda (up 16.9 per cent), through to the 18 per cent-plus growth in the more affordable but distant Seaford, Carrum and Frankston.
Despite the fallout of the pandemic, a silver lining was a shift to working from home that allowed some workers to realise their lifestyle dream, Domain chief of research and economics Nicola Powell said.
“We have seen the ability of some people to work remotely, and it is higher-income workers who are more likely to be able to work from home.
“There’s this spectrum of buyer who is saying, ‘we can move further afield, I only have to go into the office three days a week’.”
She said price growth north of 20 per cent was “astounding” but warned that at some point affordability constraints, an overall rise in stock levels and interest rate hikes would take some wind out of the demand.
As for sellers in these neighbourhoods? “It’s like winning the lottery,” she said. “This is a huge equity gain, it allows them to leverage more because they’ve got greater equity in their house. For some, it will change the financial position of their family.”
Buxton Sandringham chairman Mark Earle has seen an increase in out-of-area buyers since the pandemic hit and Melburnians got stuck at home within a limited radius.
“One of the benefits bayside has had in particular is people have looked at where they live through a microscope because they have to,” he said.
“That has necessitated people moving, and spending huge amounts of money on their property if they’re not moving.”
Especially for buyers who do not own a coastal holiday home, his area offers proximity to the city plus a water aspect, he said.
Hodges Beaumaris director Michael Cooney has watched streams of young couples who start a family and realise they need more space, then move out to the area – especially since the widespread shift to remote working.
“People are realising if they’re going to be still working from home at least two, three days a week, they need a different set up,” he said.
“They can’t do it in a two-bedroom apartment.”
A new high school has attracted families in recent years, while some buyers value the low-rise nature of the neighbourhood, he said.
Ray White Frankston principal Ash Weston has seen buyers priced out of Mount Eliza or Mornington turn their gaze to Frankston South, pushing prices up.
Beach access and local walking trails sparked an increase in activity and bidder numbers through the second half of last year, he said, while about 70 per cent of his buyers are moving from suburbs closer to the city.
“A lot of buyers coming in from those suburbs are selling up there, buying down here and getting a lot more bang for buck,” he said.
A shortage of homes for sale is only pushing prices higher, with about 50 listings in Frankston South now, compared to 100-120 in a balanced market and 200-plus in a buyer’s market, he said.
Frankston local Tania Domain is selling her home of 11 years at 35 Woodlands Grove with plans to move to northern NSW or Queensland. She has loved the area, in lockdown and out.
“I can walk down to the beach, and there’s a big park a couple of houses down. I can walk down into Frankston, and get a train into town if there’s a big event,” she said.
“The prices are unbelievable, they’re really achieving great prices in the area and it’s because we’ve undervalued our water for so long.”