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House prices have pushed past the million-dollar mark in a string of unassuming Melbourne suburbs as the property market rises.
A typical home in much of Melbourne and now even in pockets of the outer east and north-eastern suburbs would set buyers back seven figures.
But the pace of this year’s price rises is slowing down, as 13 interest rate rises take their toll on buyers’ budgets.
In the north-east, Greensborough’s median house value reached $1.05 million by October, up 5.7 per cent in the past 12 months, CoreLogic figures show.
Neighbouring Yallambie gained 8.1 per cent to a median just above $1,066,000, and next door Macleod rose 5.1 per cent to almost $1.05 million.
Each had been in the million-dollar club before, but pushed back over the threshold this year as the market recovered from last year’s downturn.
A handful of suburbs in the outer east also hit seven figures, including Scoresby ($1.03 million), Knoxfield ($1.02 million), Ringwood East ($1.02 million) and out to Kalorama ($1.02 million).
CoreLogic research director Tim Lawless said seven figure price tags had become the norm in much of Melbourne, where median house values in almost half of suburbs now top $1 million, including the eastern commuter belt pockets.
“Five or ten years ago a lot of homeowners in these areas would have fallen over if you told them their property would be worth $1 million by 2023,” Lawless said.
“It’s a pretty sad indictment for housing affordability that a median household is looking at million-dollar-plus home … we certainly haven’t seen incomes rise as fast as house prices over the years.”
Ringwood East’s median house value has risen above $1 million.Credit: Justin McManus
Lawless said the rise of remote working had contributed to price growth in middle and outer ring suburbs, but noted the growing ranks of the $1 million club was largely just due to the broader market rebound.
He expected more suburbs would break the $1 million mark in the short term, but warned market growth was slowing and prices looked to be close to stabilising in Melbourne, up only 0.2 per cent over the past four weeks.
Greensborough homeowners Deb and Peter Myers have lived in the area for 15 years, after moving from Coburg in Melbourne’s inner north, and have watched local values rise since.
Deb and Peter Myers are selling their home in Greensborough and hope to stay in the area.Credit: Joe Armao
“When we did the swap, one million dollars – it was way beyond anything that you would expect to pay for a house,” said Deb, a teacher.
She praised the area’s parklands, tree-lined streets, wildlife, large blocks, shops, transport links and family-friendly feel.
“It’s a very quiet and calm, serene environment. I really enjoy living here,” she said.
Now downsizing, they have listed their four-bedroom home with a price guide of $1.42 million to $1.55 million through Darren Jones Real Estate and hope to stay in the area.
Darren Jones Real Estate’s Ashley Croall said the Greensborough market has been tracking well this year amid demand from families and first-home buyers.
Values have been holding up at the same time as there are fewer homes for sale than usual, even though interest rates have been rising.
Renovated or well-presented homes are in most demand. On a budget of $1 million, he thought a buyer could find a renovated three-bedroom home, or a four-bedroom in need of updates.
He said home buyers who could work from home were looking at the areas they wanted to live in most, rather than areas close to their workplace.
In Ringwood East, Noel Jones Maroondah Yarra Ranges’ Simon Bismark said the market picked up during the months interest rates held steady.
Stock levels have improved but are still relatively tight, and family homes with multiple living spaces are in demand.
“There is a housing shortage both in rentals and in sales. A good home presented well and priced well is going to do well,” he said.
On a $1 million budget, he thought buyers could find a relatively new townhouse or an older detached family home requiring some work.
AMP chief economist Dr Shane Oliver said strong underlying demand – fuelled by population growth and declines in the number of people per household – and a shortage of housing had swamped the impact of rising rates. As had demand from a pool of buyers who were less sensitive to interest rate rises, such as downsizers or those with family help.
“[But] that pool of buyers I think is likely to be dissipating now as rates go higher and higher and more buyers find themselves constrained by higher rates,” he said.
Oliver expected the loss in market momentum would continue into the new year, due to affordability constraints, making it unlikely that Melbourne prices would return to peak levels, and warned there was an increasing likelihood that prices would turn negative later next year.
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