‘Feeling of serenity’: Melbourne’s most profitable suburbs for home owners

The most profitable locations for home buyers in Melbourne have been revealed in new research that shows suburbs desired for their lifestyle are also a sound investment.

In the Nillumbik shire, in Melbourne’s leafy outer north-east, 98.9 per cent of all property resales over the past decade made a capital gain.

The area, home to Eltham and Diamond Creek, ranks top in Melbourne in the 10 years to March, based on CoreLogic figures.

It was followed by the Yarra Ranges shire (98.6 per cent) and the Macedon Ranges (also 98.6 per cent) – both of which the Australian Bureau of Statistics designates as partly within Greater Melbourne – then Casey (98.4 per cent) and the Mornington Peninsula (98.2 per cent).

Lower-density lifestyle locations close to greenery or the beach have proved a contrast to some inner-city pockets heavy with high-rise development, where close to two in five property owners resell at a loss.

CoreLogic head of Australian research Eliza Owen said desirable, lifestyle locations that had long periods of steady growth, and perhaps a jump in value during COVID-19 lockdowns, were likely to record high rates of profitability.

She said beautiful natural surrounds were highly valued by home buyers.

“That is what we think of around tree-changing, sea-changing, and that leads to the transformation of these areas over time,” she said. “The fact that they’re attracting high-income owners – and that pushes up the value and increases the incidence of profitability.”

Owen added that suburbs further from the city were likely to increase in value as buyer demand flowed further out from expensive inner areas.

Eltham offers a serene lifestyle and a high chance of reselling property at a profit.Credit: Justin McManus

“You would get continual increases in population in some of the very peripheral areas of Melbourne as people get priced out of more central markets and as the population of Melbourne grows,” she said.

Owning a home for a long time can also mitigate the risk of selling at a loss, boosting areas with long-held family homes rather than investment properties.

Eltham residents Grant and Sharon Way built their home in 1995, after living seven years elsewhere in the suburb.

The retired empty nesters have made the bittersweet decision to downsize and embark on a sea change to Barwon Heads, listing their home for sale.

Grant and Sharon Way are long-term Eltham locals.Credit: Paul Jeffers

They value Eltham’s green space and community feel and are unsurprised to learn home owners there almost always sell for a profit.

“It’s pretty tightly held as a lot of our neighbours have been here longer than us,” Grant said. “If you’re going to be in an area for that long, you’re going to get capital growth.”

He feels the suburb is like being in the countryside but still so close to urban Melbourne, with great neighbours and bigger blocks of land.

“That was especially important over COVID, that we had space – we did not envy people that were locked up in an apartment in town. You still get that feeling of serenity out here,” he said.

“Mine is the community thing but definitely the greenery,” Sharon added, “It’s so beautiful and treed – part of the green wedge.”

Their agent, James Morrison, of Morrison Kleeman, said the area offered a peaceful and quiet setting that was still accessible to the CBD, and attracted buyers during lockdown from smaller homes in the inner northern suburbs.

Bike paths, walking paths and the Yarra River were drawcards, along with homes with backyards and nature views.

“In Eltham you can get a fantastic home on a quarter acre block of land for a pretty reasonable price,” Morrison said. “Eltham has become really desirable and the prices have become very solid.”

He is fielding demand from local and out-of-area buyers, and said many owners of family homes on larger blocks tended to stay at least a decade.

“COVID really highlighted what a fantastic lifestyle it could offer families,” he said.

On the Mornington Peninsula, holiday playground of Melbourne’s wealthy, Kay and Burton Portsea director Liz Jensen said buyers were drawn to the range of beaches and the social scene, within an easy drive of inner Melbourne since the freeway opened little over a decade ago.

She said the area had recorded steady growth plus a peak in buyer interest during the lockdown years, when Melbourne buyers were searching for more space to work from home in beautiful natural environments.

“Down here there was a bit of fresh air and they could breathe,” she said.

She felt the peninsula had a cosmopolitan, social, Hamptons-type atmosphere that she distinguished from somewhere like the Gold Coast.

“Sorrento might have some cosmopolitan shops now, but it’s not glitzy in any way; it’s still very natural ...

“The [area] lends yourself to feeling like you’re on holiday, with the ocean on one side and the bay.”