Melbourne's top growth suburbs for real estate prices

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Oct 23, 2017

Melbourne's top growth suburbs for real estate prices

New data from the REIV shows that government incentives have created strong demand for property at the lower end of the Melbourne market, with 44 per cent of all sales in the September quarter valued at less than $600,000.

O'Brien Real Estate

This two-bedroom house at 20 Sunset Way, Dromana, sold for $710,000 last month.
Richard Simpson, acting president REIV.

In good news for home buyers, city-wide median house price growth moderated in the September quarter as new policy initiatives increased sale volumes at the lower end of the market.

New REIV data shows the metropolitan Melbourne house price recorded its lowest increase in almost two years, up just 0.7 per in the September quarter to $817,000.

REIV Acting President Richard Simpson said the moderation could be attributed to 44 per cent of all sales in the September quarter being below $600,000.

“In the June quarter, we saw vendors with houses around that $600,000 price point hold off selling in order to capitalise on greater competition from first-home buyers.”

“These incentives have certainly worked with first-home buyers accounting for 18.3 per cent of all new home loans in August - the highest since September 2013," said Simpson.

Melbourne prices are still up 14% for the year, according to REIV data

“Despite the moderation, the market remains strong with the Melbourne median house price up a remarkable 14 per cent on the same period last year. We’re also seeing buyer demand continue to outstrip supply and a high level of vendor confidence.”

Source: REIV.

Outer Melbourne dominated the top growth suburbs as hunt down value

Outer Melbourne dominated the top 20 growth suburbs this quarter as buyers looked for affordable entry points to the market.

Source: REIV.

The seaside suburb of Dromana was the city’s best performing with its median house price increasing 15 per cent on June figures to $790,250. Sunbury, Ringwood East and Diamond Creek also experienced double-digit quarterly growth.

“Given the strength of the market at present, buyers are looking for new growth areas which offer value without the need to compromise on amenities or infrastructure," said Simpson.

“Increased competition for homes further from the city is boosting the median house price in many of these areas, with all of the city’s most affordable suburbs experiencing significant annual growth.”

Source: REIV.

Simpson added that the city’s inner ring recorded the strongest growth of any region in the September quarter with its median house price increasing 1.5 per cent to just over $1.5 million.

“Buyer demand within 10km of the CBD remains strong, which is being supported by a shortage of quality stock," said Simpson.

Apartment prices were also impacted by the government’s first homebuyer initiatives with the citywide median falling for the first time in six quarters, down 2.5 per cent to $587,000.

Meanwhile, house prices in regional Victoria increased for the third consecutive quarter, up 1.2 per cent to $385,000.