Opinion

Apartment and unit market a gateway into Melbourne’s top suburbs

Apartment and unit market a gateway into Melbourne’s top suburbs

BUYERS can save millions and still live in Melbourne’s most desirable suburbs by opting for an apartment or unit over a house, new data shows.

Real Estate Institute of Victoria research reflects staggering differences between median house andBUYERS can save millions and still live in Melbourne’s most desirable suburbs by opting for an apartment or unit over a house, new data shows.

Real Estate Institute of Victoria research reflects staggering differences between median house and unit prices in the city’s leafy east — the biggest split being $3.66 million in Toorak — as well as trendy suburbs like South Yarra, Fitzroy North, Richmond, Northcote and Brunswick.

Experts say first-home buyers have flooded the unit and apartment market since stamp duty concessions kicked in last June, with skyrocketing house prices leaving those reluctant to move to Melbourne’s fringe with little choice but to ditch the Great Australian Dream.

CoreLogic head of research Tim Lawless said this influx had boosted price gains in that market — the company’s Hedonic Home Value Index showed unit values had risen 7.5 per cent in the past year to outperform houses at 6.7 per cent.

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18/27 Wallace Ave recently sold for $635,000 in Toorak, where a typical apartment will set you back 3.66 million less than a typical house.

18/27 Wallace Ave recently sold for $635,000 in Toorak, where a typical apartment will set you back 3.66 million less than a typical house.Source:Supplied

“The unit sector appears stronger than the house market because the more affordable prices have propped up demand,” he said.

“Rather than buying new houses, which are mostly getting built on the outskirts of the city, first-home buyers are choosing high-density options.”

REIV president Richard Simpson said most Melbourne suburbs still had median apartment prices below $600,000, with the property type even remaining relatively affordable in exclusive neighbourhoods.

With a $940,000 median, the typical Toorak apartment costs less than a quarter of the suburb’s average-priced house at $4.6 million, according to REIV.

The next biggest savings are on offer in Hawthorn ($2.107 million difference between median house and unit prices), Caulfield North ($1.744 million), South Yarra ($1,672,500 million), Balwyn ($1.63 million) and Brighton ($1.615 million).

Seven-figure savings were also on offer in Hawthorn East, Surrey Hills, Kew, Glen Iris and Essendon, with six-figure discrepancies in Prahran, Hampton, Fitzroy North, Doncaster, Richmond, Northcote, Brunswick and Moonee Ponds.
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12/9-11 Newton St recently fetched $432,000 in Thomastown, which enjoyed the biggest growth in unit prices last year.

12/9-11 Newton St recently fetched $432,000 in Thomastown, which enjoyed the biggest growth in unit prices last year.Source:Supplied

Mr Simpson said apartments didn’t have to be forever homes for young Melburnians — just a means to enter the market and build equity to eventually help them upsize.

And while apartments typically didn’t record the same level of growth as houses, the property type enjoyed double-digit growth in several suburbs last year, led by Thomastown, Reservoir, Brighton and Thornbury.

WBP Group executive chairman Greville Pabst said to give themselves the best chance of earning capital growth, buyers should choose apartments in blocks of fewer than 20, with floorplans bigger than 50sq m and carparks, that were walking distance to public transport, shops and eateries.

Villa units were the pick of the property type, as they came with a backyard, while older-style apartments built between the ‘20s and ‘70s were also a good bet, Mr Pabst said.

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Suburbs where buying an apartment will save you the most

2/27-29 Marco Polo St, Essendon earned $720,000 this year. Villa units are the best performing property type in the apartment market.

2/27-29 Marco Polo St, Essendon earned $720,000 this year. Villa units are the best performing property type in the apartment market.Source:Supplied

TOORAK: $940,000 median unit price vs. $4.6m median house price = $3.66m difference

HAWTHORN: $611,000 vs. $2.718m = $2.107m difference

CAULFIELD NORTH: $661,000 vs. $2.405m = $1.744m difference

SOUTH YARRA: $608,000 vs. $2,280,500 = $1,672,500 difference

BALWYN: $820,000 vs. $2.45m = $1.63m difference

BRIGHTON: $1.085m vs. $2.7m = $1.615m difference

HAWTHORN EAST: $597,000 vs. $2.13m = $1.533m difference

CAMBERWELL: $790,000 vs. $2.303m = $1.513m difference

SURREY HILLS: $824,500 vs. $2.285m = $1,460,500 difference

KEW: $705,000 vs. $2.15m = $1.445m difference

GLEN IRIS: $680,000 vs. $2.08m = $1.4m difference

ESSENDON: $540,000 vs. $1.715m = $1.175m difference

PRAHRAN: $590,000 vs. $1.55m = $960,000 difference

HAMPTON: $1,102,930 vs. $2.05m = $947,070 difference

FITZROY NORTH: $645,000 vs. $1.504m = $859,000 difference

DONCASTER: $579,000 vs. $1.405m = $826,000 difference

RICHMOND: $495,000 vs. $1.28m = $785,000 difference

NORTHCOTE: $580,000 vs. $1.35m = $770,000 difference

BRUNSWICK: $513,500 vs. $1.25m = $736,500 difference

MOONEE PONDS: $650,000 vs. $1.335m = $685,000 difference

Source: Real Estate Institute of Victoria, median price data at end of 2017

Originally published as Price split puts buyers in a flat

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