Melbourne home prices: Where to find properties that are cheaper now than they were in 2014

3 weeks ago 9

Melbourne apartments in some suburbs are cheaper now to buy than they were 10 years ago. Picture: NCA NewsWire / Luis Enrique Ascui

Melbourne homebuyers who just want a roof over their head can get apartments today for the same price they would have a decade ago, or even almost $220,000 less.

But, experts warn a bargain might come at the cost of long-term growth potential.

New PropTrack analysis has revealed Caulfield East, Werribee South and Essendon North were suburbs with the largest falls in their median unit prices, dropping almost 40 per cent.

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Meanwhile, apartment values have basically frozen for the past 10 years in Docklands and South Yarra.

While stagnation serves as a red flag for investors, it could signal an opportunity for first-home buyers who had feared of being priced out of the market — and a sign of things to come if the government plans to turbocharge apartment development in inner suburbs take off.

PropTrack economic research executive manager Cameron Kusher said a high volume of new apartments had been keeping a lid on prices over the past decade.

A two-bedroom, one-bathroom apartment at 5/8 Tattenham St, Caulfield East sold for $455,000 in June this year.

“Prices rise because there is too much demand and not enough supply – when it’s the opposite, it can moderate prices,” Mr Kusher said.

“But the risk of delivering a high volume of housing stock is some of it could end up being of low quality.”

Despite this, the Victorian government has publicised plans to switch housing development to favour apartment and townhouse complex projects in established suburbs and build anywhere from 50,000-140,000 new residences in inner-city municipalities.

Buyer’s agent Cate Bakos said that the government has fallen asleep at the wheel with the state’s housing plan.

Prominent buyer’s advocate Cate Bakos criticised the strategy, emphasising new high-density developments were fraught with complexities.

“After decades of inaction, the government has fallen asleep at the wheel – the horse has bolted, and they need to be more creative than building a new high-density apartment tower,” Ms Bakos said.

The buyer’s advocate pointed out lenders would support borrowing for older, larger apartments, but could be more reluctant for smaller ones in new buildings.

She was also sceptical about the feasibility of achieving the targets due to the expensive red tape and rising building costs.

However, Ms Bakos said that if increased apartment construction could slow or freeze price growth, it would benefit buyers who might otherwise be priced out.

Gary Peer & Associates’ Daniel Peer aged just 26 is encouraging millennial and Gen Z buyers to consider the layout of a property before purchasing.

Gary Peer & Associates’ Daniel Peer said first-home buyers should maximise their budgets to enhance long-term property growth.

“The more you spend, the more your home is going to grow – if you can afford it,” Mr Peer said.

While not opposed to apartment living, Mr Peer said a good floor plan should be a key point for buyers to consider as it could impact future price growth.

“Buyers should aim for two-bedroom apartments rather than a one-bedroom as it provides better outcomes in the long term for buyers,” he said.

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Rather than spend $300,000 on a one-bedroom apartment, he advised looking at ways to increase your budget or cutting back on brunches and dinners out to pursue a home with at least two bedrooms.

And apartment prices could wind up frozen in more suburbs than the existing dozen, with the City of Melbourne tasked with building 134,000 new homes, primarily apartments, by 2051.

At the very least this could extend the timeline of flat property prices for Docklands, as well as Carlton, which both made the PropTrack analysis list.

Barry Plant Yarra’s Edge Brand Manager Geoff White.

Barry Plant Yarra’s Edge branch manager Geoff White said while property affordability was a pressing issue, it was less pronounced in Melbourne than in other Australian capital cities.

He stressed the value of buyers entering the property market early in life, irrespective of the property type or cost.

“$300,000 apartments are very small and are often used as an investment, but any buyer needs to gain a foothold on the market which can offer long-term benefits,” Mr White said.

“Yes, you’re better off saving a little more, but it depends on your circumstances.

“Once you have an asset, you can rent it out and use it as collateral later.”

Government plans could also slow price growth for apartments in the City of Port Phillip, home to Caulfield East which topped the PropTrack list, with the state setting a 56,000 new home target for 2051.

An apartment complex in Caulfield East.

Similar numbers are planned for the Moonee Valley municipality, which contains Essendon North and Travancore.

Tom Stock, 22, spends almost everything he earns on renting an inner-city apartment today and said he and most of his peers now looked at the home dream as a 15 or 20-year timeline.

While others would be able to buy homes with help from their parents, Mr Stock said for most, even the idea of being able to save money faster than property prices rose seemed unlikely.

University students are calling for actions on housing affordability. Picture: NCA NewsWire / Luis Enrique Ascui

Though they didn’t like the idea of others taking a financial hit, he said for many, their best hope of owning a home was “hoping for the a*** to fall out of the market”.

The Government’s plans to boost apartment numbers in inner Melbourne and potentially extend the price growth freeze from areas like Docklands were seen as a winning proposition for university students.

“Most of my peers aren’t asking for a mansion,” Mr Stock said.

“We just want a place to call home.”

And even if that resulted in buying a unit that didn’t go up in value the way it had for past generations, Mr Stock said that would be acceptable for many as it would still mean they owned the roof over their head and had some security where they lived.

“Most people our age aren’t concerned with value growth … it’s not about money; it’s about having a place to be,” Mr Stock added.

How prices have changed on Melbourne units sold in past 10 years

Suburb	Median Sale Price 12 months	Median Sale Price 10 Year	Price change over 10 years	Price change in dollar terms
Caulfield East	$332,500	$550,000	-39.5%	-$217,500
Werribee South	$424,500	$575,000	-26.2%	-$150,500
Essendon North	$395,000	$470,000	-16.0%	-$75,000
Heatherton	$360,000	$425,000	-15.3%	-$65,000
Carlton	$390,000	$455,000	-14.3%	-$65,000
Travancore	$371,000	$426,500	-13.0%	-$55,500
Notting Hill	$370,440	$409,000	-9.4%	-$38,560
Abbotsford	$505,000	$555,000	-9.0%	-$50,000
Cremorne	$587,500	$629,800	-6.7%	-$42,300
Gardenvale	$480,000	$495,750	-3.2%	-$15,750
Docklands	$605,000	$622,000	-2.7%	-$17,000
South Yarra	$545,000	$560,000	-2.7%	-$15,000
Cranbourne South	$780,000	$800,000	-2.5%	-$20,000
Strathmore	$570,000	$566,000	0.7%	$4,000
Parkville	$515,000	$505,000	2.0%	$10,000
Maribyrnong	$475,000	$465,000	2.2%	$10,000
Bundoora	$434,990	$420,000	3.6%	$14,990
North Melbourne	$524,000	$505,500	3.7%	$18,500
Prahran	$530,275	$505,000	5.0%	$25,275
Flemington	$382,000	$360,500	6.0%	$21,500
Malvern	$679,250	$632,000	7.5%	$47,250
St Kilda	$520,000	$483,000	7.7%	$37,000
East Melbourne	$695,000	$640,000	8.6%	$55,000
Oakleigh	$527,000	$483,500	9.0%	$43,500
Southbank	$608,260	$557,000	9.2%	$51,260
Melbourne	$564,450	$513,500	9.9%	$50,950
Seddon	$440,000	$400,000	10.0%	$40,000
Hawthorn East	$595,000	$540,000	10.2%	$55,000
Richmond	$595,000	$538,750	10.4%	$56,250
Yarraville	$585,000	$528,000	10.8%	$57,000
Moonee Ponds	$523,750	$470,000	11.4%	$53,750
Brunswick East	$547,500	$490,000	11.7%	$57,500
Murrumbeena	$558,500	$499,000	11.9%	$59,500
Hawthorn	$580,000	$517,500	12.1%	$62,500
West Footscray	$450,000	$400,000	12.5%	$50,000
South Melbourne	$608,000	$539,950	12.6%	$68,050
Burwood East	$641,500	$569,400	12.7%	$72,100
Middle Park	$695,000	$616,500	12.7%	$78,500
Windsor	$566,000	$500,000	13.2%	$66,000
Essendon	$541,500	$475,750	13.8%	$65,750
Doncaster	$625,000	$548,250	14.0%	$76,750
Port Melbourne	$753,000	$660,000	14.1%	$93,000
Ormond	$570,000	$498,000	14.5%	$72,000