The Melbourne suburbs where buyers pay a premium for space

Home buyers are spending more than $10,000 per square metre of land for property in Melbourne’s most sought-after, inner-city suburbs.

Those buying further away can get better bang for their buck, and pay less than $300 per square metre in far-flung neighbourhoods, Domain research shows.

Albert Park topped the list as Melbourne’s most expensive suburb per square metre, where buyers are paying a hefty $13,915 per square metre of land. Middle Park was close with a price tag of $12,730.

They were more expensive on this measure than traditional ultra-prestige neighbourhoods, such as South Yarra where the price per square metre is $10,082 and Toorak’s $7944.

Further from the city, buyers could find bigger blocks for a much cheaper per square rate. In Kinglake West, land costs are the lowest at $260 per square metre, while Heathcote Junction costs $271.

Domain chief of research and economics Dr Nicola Powell said land price does not necessarily make buying a property in these areas cheaper, but it dictates how much land the money can buy.

“What the data really showcases is the premium buyers are willing to pay to be in certain suburbs, even if they’re getting a much smaller block,” Powell said.

Agents say lifestyle is the main reason some buyers will choose to forgo a big backyard to live close to the city, while others would rather live further away and have a larger home on hectares of land.

The size of the home and the amount of land can change dramatically based on where buyers are looking.

A buyer looking at listings priced up to $2.1 million might consider:

• A three-bedroom Victorian terrace on 176 square metres of land in Albert Park, under 3 kilometres from the CBD;
• A five-bedroom house in Croydon on 1083 square metres, 33 kilometres from the city;
• A four-bedroom home in Yarrambat, which comes with 9686 square metres of land, 45 kilometres from central Melbourne.

Houses with large blocks, like those in Yarrambat, have become more popular for lifestyle buyers, Ray White Doreen’s Scott Conboy said, with many people searching for extra space to breathe.

“Since COVID people are spending more time at home and want this lifestyle,” Conboy said. “It’s a country feel, but you have a cafe 10 minutes away … you can travel for five minutes and still jump on a train to the city.”

That lifestyle is what attracted Jayne and Andrew Bedford to buy in the suburb in 2004, with the couple recently selling up to downsize.

Jayne Bedford recently sold in Yarrambat.Credit: Justin McManus

The land size gave the family, including their three children, space for a bigger home and somewhere to ride their motorbikes.

The Bedfords are now searching for a smaller house with less land, though they still want the country life.

“We just love the rural lifestyle,” Jayne Bedford said. “The kids have all left, and it’s a big house – it’s five bedrooms but with a lot of maintenance, so it’s time to move on.”

Closer to the city, Jellis Craig Port Phillip director Warwick Gardiner said buyers in inner bayside were willing to spend up, and forgo a large block of land.

Suburbs like Albert Park and Middle Park are “wedged between the city and the beach,” he said, offering space outside the home to enjoy a quiet walk, time at a nearby park or a short trip to the CBD.

“The major drawcard is that it’s quiet – you can get a park on the street or in front of the shops because all the major arterial roads bypass Albert Park, so there’s no through traffic,” Gardiner said. “It’s not overdeveloped. All the houses have a heritage overlay so there’s not masses of apartments.”

Melbourne’s housing affordability has been in keen focus as interest rates continue to rise, and rising land prices are adding to the cost for buyers across the city, Powell said.

The price for land per square metre has skyrocketed across Melbourne over the past 10 years, jumping from a median $861 in 2012, to $1811 in 2022.

At the same time, median block sizes had become much smaller – dropping from 595 square metres in 2012, to 540 square metres last year.

“Shrinking block sizes should help to slow the growth in house prices, as the cost of land is the major component in a purchase,” Powell said. “However, the land cost has not reduced – buyers are just purchasing less of it.”

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