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Dear Fellow Property Investor,
Melbourne’s outer suburbs have come into their own in the pandemic, with house prices rising by more than 20 per cent in some pockets as buyers leave the inner city for more space.
Sellers are taking the opportunity to move locally, into regional Victoria or interstate, looking for their own change of scene after the long lockdowns.
House prices jumped in the leafy north-eastern suburbs, up 27.5 per cent in Diamond Creek to a median $950,000 over the 12 months to September, the latest Domain House Price Report found.
Big rises were also recorded in Warrandyte (up 22.5 per cent to $1,347,500) and Viewbank (up 20.9 per cent to $1,185,000).
More than 120 Melbourne suburbs posted double-digit price rises – excluding the Mornington Peninsula – many in outer areas ranging from Frankston to Lilydale, Taylors Lakes and Sunbury.
It’s a shift from the pre-COVID era. In 2019, the biggest movers were sought-after inner ‘burbs such as St Kilda East, Elwood, Armadale and Canterbury.
Long periods of working and studying remotely scrapped the daily commute and freed many families from the need to live near the office, while prompting a desire for a home office and a backyard.
But the timing of the pandemic also played a role, said Simon Kuestenmacher, co-founder of The Demographics Group.
“This happened to happen in a time when the Millennial generation finally starts to have kids,” he said.
“So that means you leave Brunswick, you leave Fitzroy behind and you move to wherever you can afford a three-bedroom house.”
He expected the shift to continue even as high vaccination rates reopened city centres, but said the order of magnitude was in question.
Perhaps “knowledge workers” will go to CBD offices for collaborative tasks and to meet colleagues, then spend a few days a week at home and enjoy the extra family time, especially as employees have more leverage in a time when employers are struggling to find enough skilled workers, he said.
Jellis Craig Eltham director Chris Chapman said he had seen a big influx of family buyers coming from inner suburbs looking for more space to work and learn from home.
“Prices have definitely increased significantly in the last 12 or 18 months,” he said. “We do feel a little bit of the heat has come out of the market in the last few weeks – that’s a factor of more stock.”
Some of his sellers are downsizing to move to the regions or the coast, and he has seen more moving interstate than in previous years.
Further south, the Frankston area recorded strong growth with Frankston North (up 22.2 per cent) and Frankston South (up 21.2 per cent) making the top 10 risers. Frankston proper rose 12.5 per cent.
Harcourts Central (Frankston) officer in effective control Gerard Cosgrave has been fielding demand from buyers moving out of the inner city chasing value for money and a bayside lifestyle while working from home.
Buyers have realised the neighbourhood is more affordable than either nearby Mount Eliza or Chelsea, he said.
“People have realised, ‘Why is that the case? There’s an opportunity here,’ and have seized on the opportunity,” he said.
“People are working from home so they don’t have to travel from Frankston to the city each day and I think that lifestyle will stay in place for awhile.”
It’s a similar story west of the city, with buyers from Essendon and surrounds moving out to the Sunbury area for bigger family homes, said Aaron Hill, Ray White Sunbury auctioneer.
“A lot of the $1 million-plus homes were taking two to three months to sell,” he said. “Now, they’re selling like every other home.”
Sunbury sellers Matt and Kirrily Bevan said they were hoping for a good result for the sale of their family home, and were planning to move to Queensland for a lifestyle change after COVID. Prices in Sunbury rose 11.6 per cent in a year.
They know moving now means selling into one rising market and buying back into another that’s also recording strong growth.
“We’re not moving to cash in on the high market, because we’re buying into a high market too,” Mr Bevan said. “It’s more about a lifestyle change.
“We should get a good result, we’re hoping.”
Urban planning expert Mike Day said the popularity of outer suburbs in the future would depend on them having similar characteristics to inner neighbourhoods, such as transport links, mixed-use amenity and a compact, walkable layout.
Some of the outer suburbs that have been in demand this year have well-established villages catering to residents’ daily needs, in contrast to some of the growth areas, he said.
“You need that compact urban form, you need the mixing of the uses,” the Hatch Roberts Day partner for urban solutions said.