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THE performance of Melbourne’s southern suburb’s reflects the truism that the rich are getting richer.
Nine of the ten best performing suburbs had annual median house growth of more than 10 per cent, with the best performer, Toorak, increasing by an astounding 33.6 per cent. If you’re aspiring to get into the suburb, you’d better have found an extra $560,000 since last year - with the median house price now $2,230,500, almost double that of Melbourne’s second most expensive suburb, Brighton.
Big business is said to be driving the blue ribbon blowout - a thriving economy seeing higher salaries and pay bonuses, and strong share market returns for the navy-blue-suit-brigade that proudly populate the suburb. “With record profits and a booming stock market, (returns from shares) could be even more than their base salary,” says Angie Zigomanis, senior analyst with researcher and forecaster BIS Shrapnel, who is not surprised by the REIV findings of best performing suburbs in the south.
Buyers at the top end of the market are also more confident about their continued employment prospects, and are not as concerned about the price they pay for their dwelling, says Mr Zigomanis.
Prahran and South Yarra were the best performing inner city suburbs, popular with high income earning singles and couples. A strong rental market led by the same group keeps the inner south-east popular with investors too.
For others, wealth refuses to be caged into traditional suburbs - evident by the other strongly performing suburbs, which strings a line between Nepean Highway and Port Phillip Bay all the way down to Parkdale.
“Parkdale is like a Glen Waverley by the sea,” said Bernard Salt, consultant with KPMG and author of the book The Big Shift, which examines demographic and social change in Melbourne. “It may have been ho hum 30 years ago, but the suburb has been waiting for a surge in middle class wealth to overspill from wealthy enclaves such as Black Rock and Sandringham.”
In fact, overspilling wealth from Brighton has seen both Hampton and Beaumaris make the grade as the best improving southern suburbs this year. “As prices in suburbs closer to town become increasingly unaffordable, purchasers move out to the next affordable suburbs.” said Mr Zigomanis.
“We’ve actually had a revaluing of seaside property since the last cycle.” added Mr Salt.
“The worst is over,” says John Edwards, founder and CEO of Residex and host of the ‘Find me a Home’ radio program, who says the southern suburb’s real estate market has adjusted since the last boom, and is moving into a new growth cycle.
“And the ones that have long term rates of growth are the ones that move forward in the cycle first,” said Mr Edwards. “as they have the most prolonged period of growth over the whole housing cycle.”
In Melbourne‘s southern suburbs, it is the upper market and bayside segment leading this charge.
Agents continue to cite the bayside suburb of Hampton and St Kilda East - which connects Prahran to the middle south-east suburbs of Caulfield North and Caulfield South (all of which made the top ten list) - as suburbs with bright futures . “Both properties have increased in value more than 11 per cent each year, for the last ten years.” said Mr Edwards.
St Kilda East this year reported it’s first $1 million sale while Elsternwick, which was not included in the REIV table as it reported less than thirty sales for the quarter, is expected to continue it’s upward spiral.
Bernard Salt points to the bayside suburbs as being the ones to watch in coming years.
“Investor look for a place that has capacity for transition” says Mr Salt. “Suburbs viewed as daggy ten years ago, but which nevertheless have the right attributes of a beach, straightforward proximity to the CBD and a relatively low starting price point fit that bill.”
“What you want is an ugly duckling suburb with beauty being close to beach.”
As the baby boomer population that filled these suburbs move on, suburbs such as Chelsea, Aspendale and Mordialloc become re-valued by a new generation.” says Mr Salt. “I also feel Hampton Park and Dandenong’s role has changed”
“Whereas Dandenong was once the home to factory workers from Holden, by the early part of this this century the impact of manufacturing had diminished and what moved in was upper end work coming off high-tech distribution facilities around the area.”
Mr Zigomanis adds that the outer south east has also seen a growth in executive management coming off the number of office parks dotted in the precinct, which also earn high incomes.
“In addition you could mount an argument that suburbs such as Beaconsfield and Skye may also be benefiting from the development of the Scoresby Freeway, and the time saving it is likely to offer when completed“.
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