Melbourne real estate: Where to get the most bang for your buck and where to avoid
House prices in a handful of Melbourne suburbs are expected to explode soon, while others are touted as overpriced. See where to buy now to get the most bang for your buck.
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Melbourne house hunters looking for the best bang for their buck have been advised to home in on Yallambie, Greensborough and Heidelberg to the city’s north.
New figures from Demand to Supply Ratio (DSR) Data named the trio as some of the best examples of suburbs where growth has lagged compared to surrounding postcodes for a prolonged period of time, making them likely to experience an “explosion in prices” soon.
But it will take money to make money, with PropTrack median prices showing Yallambie’s typical house costs $904,000, while Heidelberg’s typical home will set you back $943,000 and Greensborough’s about $945,000.
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The research anticipates benefits from what real estate experts call the “ripple effect”, where home values in one suburb rise as buyers are priced out of a preferable neighbour.
For the three named suburbs, near neighbours in the City of Banyule include Eaglemont, where house prices have shot up by an eye-watering 30.9 per cent in the past three months to hit a $2,522,500 median, and Ivanhoe, which rose 16.3 per cent to $1.41m.
Amy Lunardi Property founder and buyers advocate Amy Lunardi said Yallambie was a “bit of a hidden suburb” that provided good value due to its lack of a train station.
“It’s in proximity to some really lovely suburbs and instead of having to go further away from the city you can consider a suburb where you might have to drive to the station, but remain closer to town,” Ms Lunardi said.
She added that it was also near Viewbank Secondary College, making it an attractive option for families.
Ms Lunardi also said that northeast suburbs were all likely to see more growth in the future once the North East Link motorway, currently under construction, was completed.
“Some people who can’t afford Ivanhoe go to Heidelberg, it’s a really reasonable next option with a similar vibe and amenities without being too far from the city,” she added.
“The North East Link will be a massive positive for that whole area and I also think buyers who value a bit more space and greenery are prepared to go out a bit further to stay in the Banyule area.”
Southeast suburbs including Caulfield South and Caulfield, both with a median house cost of $1.4m, and Cheltenham, $1.1m, were other promising areas for future gains.
Ray White Cheltenham agent Trevor Bowen said the suburb had undergone a post-Covid boom over the past couple of years and its surrounding areas were just now “catching up”, however he believed Cheltenham would soon take off again.
Mr Bowen said the suburb was likely to see more growth in the near future, particularly as it was a popular option for families due to amenities like schools, shops, parks and the Black Rock beach.
DSR Data also uncovered Melbourne’s most overvalued suburbs by evaluating where house prices were similar to local apartments, as well as lower income areas on the outskirts of the city that had seen high price growth since last year’s interest rate hikes.
The firm’s data scientist Jeremy Sheppard said these areas were less likely to see significant price growth in the near future.
“It’s the top end of the market, those areas where buyers can now get better value than before, that grow first,” Mr Sheppard said. “The rest of the market eventually follows.”
He pointed to Fairfield and Doncaster, both with median house prices of $1.7m, and Lower Plenty, where the typical home costs $1.5m, as examples of neighbourhoods that could be seen as overvalued on their metrics.
In the southeast, buyers looking for value might avoid areas like McKinnon, where a typical house costs $2m, as well as Murrumbeena, which has a median house price of $1.8m.
“Overvalued suburbs have a higher probability of underperforming compared to the rest of the country and there is a higher probability that prices could fall,” he said.
A handful of suburbs on the Mornington Peninsula were also considered overvalued, including Crib Point, Somerville and McCrae.
Several of the Peninsula markets that were touted as overpriced by DSR Data in May have since fallen in value.
Dromana lost $165,000 from its median house price in the past six months, while Blairgowrie plummeted $105,800, Safety Beach $91,400 and Sandhurst $66,000.
VALUE FOR MONEY IN CHELTENHAM
Andrew and Emily Henshaw recently purchased their first home in Cheltenham after renting together for five years.
While they had their eye on Melbourne’s southeast, particularly the bayside area, the couple found they were quickly priced out of surrounding suburbs such as Mentone, Beaumaris and Black Rock.
“The bang for our buck is what stood out to us, we could get a larger place than what we could afford in Mentone,” Mr Henshaw said.
“Being a bayside suburb, a lot of the prices get up over $1m quickly, especially when you get closer to the beach.”
Mr Henshaw added that proximity to their respective workplaces in the CBD was also a factor when choosing to live in Cheltenham.
The pair paid $960,000 for a three-bedroom pad, which they purchased after its November auction helmed by Ray White Cheltenham chief auctioneer Kevin Chokshi.
Mr Chokshi said there was a very strong appetite for the suburb among buyers and he was expecting its value to increase further once the Melbourne Airport Rail station, part of the upcoming Suburban Rail Loop, was completed.
“We see very strong auction clearance rates,” he added.
“It has good value … but it hasn’t quite boomed yet so I think that’s coming. Not many suburbs will have three train stations.”
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