20 Melbourne suburbs that are undervalued right now

An inner-city area has been revealed as the most undervalued property market in Victoria which could potentially see “rapid growth” in the coming years.

672 Station St, Carlton North, which is on the market right now, is Melbourne’s most ‘undervalued’ suburb based on new stata.

HOUSES in Carlton North have been revealed as the most undervalued property market in Victoria which could potentially see “rapid growth” in the coming years.

New research from Demand to Supply Ratio (DSR) data has uncovered the suburbs across the state where demand is starting to outweigh supply, and where price growth has lagged over an extended period of time.

These undervalued markets also included less desirable or ‘bridesmaid’ suburbs, where property prices sit well below those of neighbouring areas.

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With a median cost of $1.456m, Carlton North houses were overlooked the most, according to DSR founder and data analyst Jeremy Sheppard.

Mr Sheppard noted that undervalued areas typically had large price falls last year and sub-par growth over time, but were now more accessible for buyers on a budget, leading to a recent improvement in demand.

“It’s underperformance followed by green shoots,” he said. “They’re suburbs where prices hit a peak and came down drastically in the last 12 months and you’d have buyers thinking maybe the properties are good value now.”

124 lee st, Carlton North is on the market for $1.1m-1.2m.

Mr Sheppard added that anyone buying in these undervalued areas could benefit from “rapid capital growth” if they bought in now.

“You could see above average growth in the next few years, while it’s still comparatively better value for money,” he said.

The undervalued market with the biggest price fall in the past year was the St Kilda housing market, with houses in the beachside ‘burb dropping by 11.4 per cent, according to PropTrack data.

St Kilda-based buyer’s advocate Emily Wallace said the suburb was often overlooked by buyers and not fully appreciated for the amenities it offered including the beach, public transport and local eateries.

“Unfortunately one ‘rough’ pocket results in the whole suburb being painted with the same brush,” Ms Wallace said.

9 Griffiths St, Beaumaris is for sale for $5.5m-$6m.

“Neighbouring suburbs such as Elwood and Albert Park are highly sought after, it’ll only be a matter of time before buyers may need to consider an opportunity in St Kilda as it offers affordability.

“I suspect it’ll maintain a gap in price from those premium surrounding suburbs but it may close as people realise the value.”

Meanwhile, Carlton North houses fell by 3.4 per cent in the past year, while those in bayside suburb of Beaumaris and in the west, Brooklyn, dropped 7 and 8.3 per cent respectively.

Nelson Alexander Carlton North agent Nick West said stock levels had dropped dramatically in the suburb, which had created more competition among buyers.

“It has quite a low turnover, like Parkville and Carlton as well, they’re not transient suburbs,” Mr West said.

St Kilda is also on the list of most-undervalued suburbs, with 58 Argyle St, St Kilda seeking $960k-$1.05m.

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Jellis Craig Brunswick director Elizabeth Kelly, who follows the Carlton North market “quite heavily”, also noted there had been a higher demand for houses in Brunswick East in the past six to 12 months compared to those in Carlton North.

“Your typical empty nesters who were gravitating to Carlton North are now wanting to buy in Brunswick East, just off Lygon St where there are great restaurants, bars and heaps of atmosphere,” Ms Kelly said.

“It’s also a hop, step and a jump to Rathdowne Village, which was pumping back in the day but is not as bustling as the Brunswick East end of Lygon St now.”

She added that there was opportunity for “good buying” now in Carlton North after prices had come down from their Covid peak.

“But demand at the moment has picked right up in comparison to a couple of months back, and Carlton North is playing catch up a little bit,” Ms Kelly said.

“We’re seeing more people pop up but the stock is tightly held, so it’s all selling because demand is there but supply isn’t.”

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