The Melbourne suburbs where house prices are back to 2015 levels

Reporter

Property prices in some Melbourne suburbs are back to mid-boom levels, following the sharp correction the market experienced after years of runaway growth.

A total of eight suburbs have fallen to back to levels last seen in 2015, including Balwyn North, Caulfield North and Kew.

And a raft of suburbs are now at the same price point as they were in 2016 including sought-after areas such as Brighton, Flemington and North Melbourne, analysis of Domain data shows.

The price falls of recent years have come amid a clampdown on mortgage lending, but sentiment in the property market ticked up this week after the bank regulator proposed a loosening of lending standards.

The Coalition’s shock election win and a strong indication the Reserve Bank will cut interest rates to a new historic low also buoyed sentiment. Some economists tipped a shallower than thought downturn, with AMP Capital’s Shane Oliver revising a capital city average forecast of a 15 price drop to only 12 per cent, and UBS’s George Tharenou and Carlos Cacho trimming a 14 per cent forecast fall to 10 per cent.

Domain economist Trent Wiltshire said the suburb-specific price falls were in line with the broader market trend; the biggest beneficiaries of the boom had also come back the most in the correction and now they were where the clock had been wound back furthest.

“All the suburbs that are back to 2015 or 2016 levels are all in the inner east and south,” he said.

“That’s where the market’s been the weakest.”

Suburb March 2019 median YoY Prices back to Balwyn North $1,662,500 -13.9% Jun-15 Mont Albert North $1,235,500 -16.0% Jun-15 Caulfield North $1,589,000 -20.9% Sep-15 Kew $1,800,000 -18.2% Sep-15 Ashwood $1,100,000 -16.1% Dec-15 Blackburn $1,149,000 -17.3% Dec-15 Carnegie $1,190,000 -16.6% Dec-15 Hughesdale $1,065,000 -20.5% Dec-15

Source: Domain

Despite Brighton’s median coming back to levels last seen three years ago, Marshall White Brighton agent Stephen Smith said its appeal was still strong because of its status.

“The thing with Brighton is it’s beachside, has family-sized lots and homes and we’ve got brilliant shopping and brilliant schools. The fundamentals are rock solid,” he said. “If you have a family and you want to live by the beach and have the best, you come to Brighton.”

Mr Smith is selling Brighton architect Piet Gouws’ home at 73 Asling Street.

Mr Gouws said the relative market weakness was an opportunity for him to move onto a new asset, and despite coming back to a median price of $2.278 million — the level it was at in the March quarter of 2016 — the five-year growth was still strong.

“If it’s Brighton specifically, the desirability is always going to be key in terms of maintaining a price,” he said. “Brighton as a whole represents desirability. Even in a soft market Brighton won’t be as affected in other areas.

“As a place to raise a family but also as a place to invest with your family home, it’s one of the best in Melbourne.”

Mr Wiltshire said the majority of suburbs that had reset prices most were in the east and south of the city: Chadstone, Elwood, South Melbourne, Glen Iris, Windsor, Kew East, Sandringham and Mordialloc.

But he said a couple of CBD fringe suburbs in other directions had similar price falls.

“It’s only the odd suburb in the north and the west, and the suburbs that have fallen back are the ones close to the CBD.

“There was lots of investor activity in these regions in the boom, but less activity now.”

Kensington and Flemington were two standouts, Mr Wiltshire said.

Suburb March 2019 median YoY Prices back to Elwood $1,600,000 -12.1% Mar-16 South Melbourne $1,200,000 -21.1% Mar-16 Brighton $2,278,000 -11.0% Mar-16 Doncaster East $1,143,000 -13.7% Mar-16 Flemington $880,000 -16.2% Jun-16 Chadstone $909,200 -15.8% Jun-16 Abbotsford $970,000 -20.8% Jun-16 Windsor $1,235,000 -13.8% Jun-16 Bentleigh $1,310,000 -6.4% Jun-16 McKinnon $1,451,000 -11.7% Jun-16 Canterbury $2,295,000 -20.9% Jun-16 Glen Iris $1,760,000 -8.8% Jun-16

Source: Domain

Nelson Alexander Flemington partner Paul Harrison said these two suburbs still managed to fly under the radar with buyers.

“Even at the peak of the market we felt those suburbs as inner-city suburbs — and their proximity to the CBD and transport access — we thought they were largely undervalued,” he said. “Especially when you compare them to suburbs in the same proximity to the CBD.

“Fitzroy and Carlton spring to mind as examples.”

Suburb March 2019 median YoY Prices back to Blackburn North $1,010,000 -9.7% Sep-16 Blackburn South $997,500 -11.7% Sep-16 Burwood East $1,000,000 -10.3% Sep-16 Forest Hill $886,500 -12.3% Sep-16 Glen Waverley $1,219,000 -9.0% Sep-16 Mount Waverley $1,225,000 -11.6% Sep-16 Nunawading $906,250 -10.7% Sep-16 Heidelberg $1,022,500 -12.8% Sep-16 Ivanhoe $1,215,000 -10.3% Sep-16 Malvern $2,122,500 -18.0% Sep-16 Port Melbourne $1,360,000 -9.3% Sep-16 Hampton East $1,132,750 -14.2% Sep-16 Ormond $1,400,000 -12.0% Sep-16 Camberwell $1,935,000 -7.9% Sep-16 Doncaster $1,182,500 -12.1% Sep-16 Kew East $1,712,000 -6.8% Sep-16 Surrey Hills $1,730,900 -13.5% Sep-16 Templestowe $1,272,500 -9.2% Sep-16 Templestowe Lower $1,095,000 -11.0% Sep-16

Source: Domain

Mr Wiltshire said these suburbs had come back so much because they were propped up by investment activity during the boom, but he did not think they were overvalued at the peak.

Industry Super Australia chief economist Stephen Anthony disagreed. He said most of Melbourne was still overvalued.

“We haven’t seen value return to the residential market from an investment perspective. We haven’t reached the bottom yet,” he said.

“Start from 1996, or after the last recession in Australia, and track it to 2015 and look at those same suburbs’ [prices].

“Ask yourself if they’re still overpriced. We had a long run that took fundamentals a long, long way from value.”

Suburb March 2019 median YoY Prices back to Kensington $907,500 -9.5% Dec-16 Maribyrnong $843,000 -10.3% Dec-16 Mitcham $900,500 -13.5% Dec-16 Wheelers Hill $1,050,500 -10.3% Dec-16 Heidelberg Heights $747,000 -8.5% Dec-16 Thornbury $985,000 -12.4% Dec-16 Viewbank $915,000 -8.5% Dec-16 North Melbourne $1,056,000 -18.1% Dec-16 Prahran $1,370,000 -8.7% Dec-16 Highett $1,150,000 -9.0% Dec-16 Mordialloc $875,000 -13.0% Dec-16 Murrumbeena $1,246,500 -7.7% Dec-16 Oakleigh South $895,000 -12.0% Dec-16 Parkdale $1,035,000 -13.8% Dec-16 Sandringham $1,610,000 -7.9% Dec-16 Bulleen $1,145,000 -8.0% Dec-16

Source: Domain