Victorian government set to make millions selling Caulfield-Dandenong sky rail homes
The Victorian government is poised to make millions on the dozens of properties it bought off homeowners in the shadow of the controversial Caulfield-Dandenong sky rail project.
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The Victorian government is poised to make millions as it sells off dozens of homes it bought up along the Caulfield-Dandenong sky rail project.
After announcing the controversial $1.6bn elevated rail that would stand up to 11m tall in 2016, the state offered to buy about 130 residences backing onto the controversial development.
Treasury records show 44 of those properties, including houses, townhouses, units and apartments have now been deemed “surplus” and prepared for sale, with local agents reporting the government is waiting for the market to improve before listing the properties it paid a combined $44.08m for.
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The government this week confirmed they had purchased 75 homes in total, but declined to confirm what they had spent all up.
To date, 24 have been sold, including 11 that went to Homes Victoria as affordable housing.
Six more properties bought in the 2016-2018 spree and funded via the Level Crossing Removal Project have subsequently sold on the open market, notching an average increase of more than $100,000 — and a $610,000 combined windfall for the government.
This does not include rental returns, with records showing the list of now sold homes were advertised for lease at anywhere from $400 a week, or $20,800 a year, to $825 a week, $42,900 a year, while the government owned them.
A further seven homes that appear to have been sold without marketing and have netted a further $2.68m. Local sources have suggested Glen Eira Council may have been the buyer for some, with plans to turn them into open spaces.
Government hopes to sell the homes sooner have run into a slew of issues after buying them just before a financial services Royal Commission that sparked a market correction.
Multiple lockdowns also removed the possibility of auction sales in 2020 and 2021, and then rate hikes derailed their first attempt to sell last year.
But a local agent said the homes would do well if they returned to market in the next three to six months, estimating 21 Rosstown Ave, Carnegie, the government's priciest purchase at $1.875m could potentially break the $2m barrier today.
A more affordable option, like the two-bedroom unit at 2/1 Arthur St, Murrumbeena, last sold for $725,000 would now be worth $800,000-$850,000.
SKYRAIL SALES
11 Lorne St, Caulfield East
Government paid: $1.74m — February, 2018
Sold: $1.85m — April 2022 (Ray White)
Profit: $110,000
Last advertised rent: $825 a week, August, 2018
6 Ella St, Murrumbeena
Government paid: $1.05m — February, 2017
Sold: $1.1m — May, 2022 (Jellis Craig)
Profit: $50,000
Last advertised rent: $400 a week, June, 2021
6 Ricourt Ave, Murrumbeena
Government paid: $1.275m — December, 2017
Sold: $1.33m — June, 2022 (Ray White)
Profit: $55,000
Last advertised rent: $470 a week, August, 2019
8 Ricourt Ave, Murrumbeena
Government paid: $1.2m — October, 2017
Sold: $1.3m — June, 2022 (Ray White)
Profit: $100,000
Last advertised rent: $475 a week, April, 2021
25A Oakdene Crescent, Carnegie
Government paid: $750,000 — November, 2016
Sold: $885,000 — October, 2022 (Jellis Craig)
Profit: $135,000
Last advertised rent: $400 a week, December, 2021
20 Hewitts Rd, Carnegie
Government paid: $840,000 — October, 2016
Sold: $1m — March, 2023 (Jellis Craig)
Profit: $160,000
Last advertised rent: $495 a week, July 2020
Ray White Carnegie partner Tom Grieve has worked on four sales so far and said while three had sold for more than the government paid, one had been withdrawn as interest rates rises impacted the market.
“But I think it will be a very good investment for the government long term,” Mr Grieve said.
“At the time they would have paid market value, as if there was no sky rail coming, and they are now selling for more.”
Most of the homes are in Carnegie, where PropTrack data shows the median house price has risen from $1.4m in September 2017 to $1,616,500 today, or Murrumbeena, where the typical $1.621m house is $216,000 better off than six years ago.
Mr Grieve said gains for the homes bought by the government would have been below this level as a result of the new infrastructure, but those a block or two away had benefited from walking and cycling paths, basketball courts and other community amenities built beneath the railway.
“It definitely did affect prices, it’s added more for a lot of nearby owners — but not those directly under the sky rail,” Mr Grieve said.
“A lot of the people in the area were furious at first, but once it went up they were fine with it.”
Jellis Craig Bayside Glen Eira director Mark Staples worked on some other listings for the government and said an initial approach to sell some of the homes was made while the market was booming late in 2021, but sales stalled when interest rate hikes began in May last year.
Mr Staples said he did not have any indication of when homes would begin to hit the market again, but noted there were benefits to homes remaining available to the rental market in the interim with the area at an about 2 per cent vacancy rate with many landlords today selling up in response to rising mortgage and land tax costs.
Compton Green has managed the rentals for the government and director Adrian Butera said the homes had been consistently tenanted.
“We haven’t had any issue leasing them,” Mr Butera said.
“It’s like living on a main road. Plenty of people live on those and rail lines.”
Gary Peer Carnegie director Leor Samuel has not been involved in sales or leasing, but said while the local market was today “patchy” and had fluctuated over the past six years the houses held by the government would be in demand when listed.
“The need for more houses as opposed to more apartments to come onto the market is favourable and with this pocket of Glen Eira in high demand the increase of supply of houses to the market would be more welcomed.,” he said.
A government spokesman said homes were sold voluntarily.
“Properties still owned by the state are tenanted and contribute to the government’s initiatives to improve rental availability and provide more affordable housing near public transport,” they said.
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