Large homes in Melbourne’s outer suburbs are seeing a house price boom, with median prices increasing, in some cases, by almost $12,000 a month in 2017 – driven in large part by first home buyer changes introduced in the past 12 months.

In the last quarter of 2017, the median sale price for houses in one outer western suburb , Hoppers Crossing, grew by $135,000 over the year. 

And one outer south-eastern Melbourne suburb, Frankston North, recorded an increase of more than $80,000 in 12 months. A recent sale at 3 Chile Street, Frankston North was originally purchased in April 2012 for $235,000 and sold last month for $480,000. 

I believe one of the key drivers of these price increases has been the removal of stamp duty for houses under $600,000, introduced in July last year.

The removal of stamp duty has delivered a major boost to many outer areas of Melbourne, particularly locations with good road and rail links and strong local infrastructure.

This has been a positive outcome for those looking to sell in these key locations. However there is a potential danger that first home buyers are increasingly being priced out of key locations – which will leave them with little option other than moving further out, often to regional areas.

The time to buy is normally “now” – and no more so than for Melbourne’s first home buyers. It is a critical period – especially if they want to take advantage of the significant stamp duty concessions available for homes in outer Melbourne.

With Melbourne growing as a city - and the increasing demand on real estate city-wide - these key outer locations won’t be relatively affordable for an extended period.

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