This article was first published by Christina Zhou on 4th Sept 2016 via domian.com.au | Image: Toorak’s median house price has smashed through $4 million for the first time. Photo: Supplied
Property prices is a hot topic at dinner parties, and in Melbourne’s most exclusive enclave, the discussion of a standard address would now circle a price tag of $4 million.
Toorak’s median house price has jumped 24.3 per cent over the past year to a record of $4,227,500, Domain Group data shows.
It comes as new data reveals Toorak home owners are the city’s keenest renovators, committing more than $15 million on updating their properties over the June quarter.
Toorak home owners committed the most amount of money renovating their homes in the June quarter. Photo: Supplied
Across greater Melbourne, more than $969 million of of alteration and renovation works were approved in the first half of the year, up $68 million on the same period last year, data from the Australian Bureau of Statistics shows. Residents in the blue chip postcodes of Albert Park, Hawthorn and Armadale are also among the biggest renovation spenders.
A shortage of stock is forcing more home owners to renovate, while others are choosing to stay put in a rising market, experts say.
Domain Group chief economist Andrew Wilson said people typically spent more on renovations when house prices were rising and when interest rates were low.
Hawthorn home owners are not only big renovation spenders, but also successfully auctioned their properties over August. Photo: Supplied
“Toorak has been a very strong market recently; prices have risen after a weaker period,” he said.
“With your land values being so strong, then there’s certainly no risk of an overcapitilisation in your property … it saves you the transaction cost of looking for another property.”
With the undersupply of houses on the market this year compared with last year, the temptation for buyers who couldn’t find a bigger house was to renovate, Jellis Craig Boroondara director Richard Earle said.
Two apartments at 2 and 2a Fairview Street, Hawthorn sold together for $3,825,000. Photo: Jellis Craig
“With the rise in apartments, we’re getting more and more couples who are used to living in smaller parcels of land, so we’re seeing some double-fronted accommodation on single-fronted allotments,” he said. “We’re seeing the big second storey go on on a single-fronter and a big kitchen/family room swung right across the back of the property.
“People are valuing the access to the amenities even more … and with that, they’re willing to spend large amounts of money renovating and extending, simply because they value that position so much more than perhaps being further away.”
People in this market were more likely to renovate and stay where they are because sometimes the gap could widen between what they can sell their property for and what they can buy, Abercromby’s director Rob Vickers-Willis said.
Most vendors were choosing to buy first because they did not want to get out of the rising market, whereas people would sell first in previous cycles, he said.
“Stock [in Stonnington] is down 25 to 30 per cent from 12 months ago, a lot more has been done off market,” Mr Vickers-Willis said.
“There are a lot more sales made on a longer settlement, from six to nine months, to give buyers the confidence to bid and allow ample time to sell their property in a prime time, separate to school holidays.”
Hawthorn home owners also have reason to celebrate, with all 14 vendors selling their houses under the hammer, or shortly after a pass-in in August. Brighton, Bentleigh and Hampton also achieved 100 per cent clearance.
Biggin and Scott Brighton director Trudy Biggin believe stock in the Brighton area was down on last year so there were more prospective buyers and bidders for each house.
“There’s a level of optimism, and I think that people are worried that they may not find the house they want – the ones coming up in spring,” she said.
The auction data comes as Domain Group’s Asking Price Index found vendors across Melbourne were asking 11.1 per cent more over winter than the same time last year, and the median asking price rose 1.1 per cent in the three months to August. This measure of the housing market considers homes marketed for private treaty rather than auction campaigns.