Melbourne battler suburbs go toe-to-toe with blue-chip areas for mortgage freedom: SuburbTrends

3 weeks ago 7

art for Sat story april 5 2024 - for herald sun real estate

Some of Melbourne’s most affordable suburbs have a higher or equal percentage of homeowners who have paid off their mortgage, when compared to the city’s blue-chip areas.

Melbourne homeowners in battler ‘burbs from Thomastown to St Albans, Fawkner and Altona Meadows are among the city’s most likely to have paid off their mortgage.

They rank alongside Brighton, Balwyn and Toorak as having the highest share of mortgage-free residences, according to surprise figures from SuburbTrends.

Some of the city’s most affordable areas, such as Keilor Downs — where a typical house costs $760,000 — have more homeowners without a mortgage than with one — 51 per cent have already paid theirs off.

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Flinders has the highest percentage of homeowners in Greater Melbourne to have paid off their home loan, at 64 per cent.

The Mornington Peninsula town has 1240 mortgage-free homes, according to SuburbTrends, while PropTrack figures show it has a $4.1m median house price.

The next highest on the SuburbTrends’ list were areas with typical house values below $1m,

including Reservoir’s north west and Taylors Lakes, both at 54 per cent.

More expensive areas such as Brighton, Toorak, Balwyn, Wheelers Hill and Beaumaris had 40 per cent or more mortgage-free households.

Joining them was a swath of Melbourne’s northern, northwestern and western suburbs — with six-figure median house values from Thomastown to Avondale Heights, St Albans, Fawkner, Altona Meadows, Keilor Downs, Sunshine North and West, Kings Park, Gladstone Park, Westmeadows, Campbellfield, Coolaroo and Airport West.

3 Bellevue Drive, Keilor Downs, $800,000-$880,000 - for herald sun real estate

This five-bedroom house at 3 Bellevue Drive, Keilor Downs, is for sale with a $800,000-$880,000 asking range. More than 2000 of the suburb’s homeowners, or 51 per cent, have paid off their mortgage.

3 Dendy St, Sunshine North, $700,000-$750,000 - for herald sun real estate

At 3 Dendy St, Sunshine North, this house has a $700,000-$750,000 asking range. 45 per cent of the area’s homeowners own their residence outright.

SuburbTrends founder Kent Lardner said that suburbs with high levels of outright home ownership tended to have low sales turnover, reducing housing supply and making it harder for younger and lower-income buyers to enter the market.

Melbourne-based Evolution Financial Services & Advisory founder and director

Luke Harris, who is the Mortgage and Finance Association of Australia’s Victorian Forum Committee chair, said anecdotal industry feedback indicated that the majority of people who have paid off their mortgages were older.

“While we do see some younger demographics that have paid off their mortgages, this is not a common everyday occurrence,” Mr Harris said.

Suburb Trends founder Kent Lardner.

24 Robinvale Ave, Thomastown, $720,000-$770,000 - for herald sun real estate

This house at 24 Robinvale Ave, Thomastown, has $720,000-$770,000 price hopes. A total of 3106 homeowners in the suburb are mortgage free, equating to 48 per cent.

He said that Melburnians with a $1m mortgage, on a principle and interest loan with a 5.99 per cent home loan rate, would pay about $1,156,608 in interest to their bank across a 30-year mortgage term – or $1,637,680 on a 40-year mortgage.

However, there are massive savings to made for those lucky enough to be able to pay off their home loan sooner rather than later.

“If a client is in a position to pay off their loan in 10 years, at an interest rate of 5.99 per cent, the estimated interest payable would be $331,643,” Mr Harris said.

“If they were to pay over 20 years this figure would change to $718,050.”

Many Melbourne households who have paid off their mortgage are aged 60 and above.

6 Allan St, Fawkner, $750,000 - for herald sun real estate

In Melbourne’s north, 6 Allan St, Fawkner, is for sale with a $750,000 price tag. More than 1560 households (42 per cent) in the suburb have paid off their mortgage.

Profession of Independent Financial Advisers founding member Matthew Ross, a director at Roskow Independent Advisory’s Melbourne office, said paying off a mortgage within a decade would be tough for most homeowners.

Mr Ross said a household’s ability to do so depended on factors such as whether they had multiple incomes, how much they wanted to spend on their children’s education and figuring out ways to “earn more and spend less”.

As property prices continue to outstrip wage increases, younger generations could respond by challenging the traditional great Australian dream of owning a house on a big block, he added.

“They might be happier in an apartment or smaller homes rather than breaking themselves to have a big house with four to five bedrooms,” Mr Ross said.

1 of 37 Elizabeth St, St Albans, $630,000-$670,000 - for herald sun real estate

1/37 Elizabeth St, St Albans, has a $630,000-$670,000 asking range. More than 40 per cent of homeowners in the suburb, which has a $665,000 median house value, are mortgage free.

Harcourts Rata & Co Thomastown and Lalor executive director Alex Doucas said a lot of European migrants had settled in Thomastown across the 1970s.

“It’s a very blue-collar, hardworking suburb where the priority was to pay off the home,” Mr Doucas said.

While he nowadays lists a lot of houses on behalf of retirement-age owners, young first-home buyers often snap them up.

“For people from a European background point of view, many are absolutely helping their kids and grandkids out when they can,” Mr Doucas said.

-Additional reporting by Viva Hyde