The Victorian locations where home sellers are doubling or tripling their money

Home owners are doubling – and in some cases, tripling – their money when selling property in some of Victoria’s most sought-after destinations.

In Somers, on the Mornington Peninsula, home sellers made a median profit of 268.3 per cent of their purchase price, Domain’s Profit and Loss report for the last financial year, released on Thursday, reveals. Houses in neighbouring Balnarring recorded a median 205.5 per cent profit.

The outer suburb of Wonga Park, north-east of Melbourne, and the regional towns of Cannons Creek and Mount Beauty were other examples where home owners tripled their money at sale.

In Melbourne’s inner south, Middle Park and Elsternwick owners made profits of 196.8 per cent and 185.3 per cent, respectively.

Houses in a string of regional towns, in alpine areas and on the Surf Coast, helped some home owners nearly triple their money.

Demographer Mark McCrindle said well-positioned homes in regional and coastal areas recorded big-value increases over the past few years because pricing in these locations started out lower.

“Many of the lower prices were pre-pandemic and over the last few years, as people have decoupled work from location and have been able to work from home or work remotely, it’s really opened up the regions, so that’s led to significant price increases in some of those lifestyle regional areas,” he said.

McCrindle said low turnover rates in popular urban areas had also contributed to rising prices.

“The average renter stays less than two years, but Australia has one of the lowest turnover rates and the longest tenure rates of homes that people own, either with a mortgage or owned outright,” he said.

“If someone has a good home in a well-positioned area in one of our large capitals and they’re prepared to hold it for a reasonable time ... that’s where we see those increases.”

Warwick Gardiner, Jellis Craig’s Port Phillip director, agreed that a lack of housing stock in sought-after suburbs, caused in part by long hold periods, had helped prices soar in areas such as Middle Park, where home sellers are raking in a median of $1.24 million in profit.

“It’s almost like the perfect storm,” Gardiner said. “You’ve got low stock volume, you’ve got period homes, and you’ve got large blocks of land, and when you combine those three together in both of those suburbs, they’re few and far between, and then when they come up for sale, they’re hotly contested.”

Gardiner said the turnover rates for larger homes in Middle Park and Elsternwick were lower than in neighbouring St Kilda, where there was greater apartment stock and smaller block sizes.

He said a lot of downsizers were selling large homes to families willing to pay more for big blocks in a premium location.

“I think buyers know how rare it is [for these houses] to come to market ... and they seize the opportunity because the next one might not come up for 10 or 20 years,” he said.

“We often say to people that are buying in these suburbs that it’s virtually impossible to over capitalise. Even if you pay a little bit more, the way you have to now, and even if you want to sell it in a year or two, you’re generally making a profit because the price is rising year-on-year.”

Ray White chief economist Nerida Conisbee said home owners who purchased before the COVID boom would be those making the largest profits, especially in holiday destinations such as Bright and the Mornington Peninsula.

“The timing is really important. So if you bought 10 years ago, you would have absolutely made a fortune because places in those areas were really cheap, but if you bought, say, two years ago, you probably would have lost money,” Conisbee said.

An auction in Brunswick East. Low turnover rates have helped pushed up prices in some sought-after areas.Credit: Arsineh Houspian

Conisbee said the popularity of the pandemic tree change helped quicken property growth across coastal and regional areas that were previously more affordable.

“If you look at Mornington Peninsula, it was pretty extreme, but it’s now come back and hasn’t bounced back up again,” she said.

Sorrento, McCrae and Blairgowrie were among the peninsula spots where home sellers over the last financial year sold their houses for more than double what they paid.

Buxton Mornington Peninsula real estate agent Madeline Kennedy said generational holiday homes were among the houses put up for sale.

“They might have been built in the ’70s or the ’80s and the kids can’t necessarily afford to buy them out,” she said.

Kennedy said Somers and Balnarring, on the Western Port Bay side of the peninsula, had become more popular in recent years, causing prices to increase.

“They were probably relatively undervalued for a long time because they were quieter little seaside towns that some people didn’t know about,” she said.

“People [are] moving here to get out of the busyness of Sorrento, Blairgowrie and Rye, but we don’t have the same volume of housing.”