Sea And The Cbd, The Ingredients That Fuelled A Property Boom

The Age

Saturday December 16, 2006

TIM COLEBATCH, ECONOMICS EDITOR, With MIKE PRESTON

REAL estate prices have soared throughout Victoria in the past decade, but there have been winners and there have been also-rans. While some astute buyers saw the value of their home quadruple between 1995 and 2005, others have been lucky to see it double.

The Valuer-General's annual review of Victorian property prices, A Guide to Property Values 2005, shows that two things determined how much your suburb or town rose in price over that giddy decade: how close your house was to Melbourne, and how close it was to the coast.

Score well on both questions and you were one of the big winners in this one-off, probably never-to-be-repeated decade, in which the median price of a house in Victoria jumped from $117,000 to $280,500.

The biggest losers were younger Victorians without a home. They now have to pay 140 per cent more to become home owners. But there were also relative losers: people who owned houses in the wrong place.

Within Melbourne, that mostly meant in the outer suburbs, where prices rose far more slowly than closer in. Across the state, it meant areas inland or more than a couple of hours' drive from Melbourne.

The biggest winners were the people who in 1995 owned houses in Melbourne's inner or bayside suburbs or on the coast within a couple of hours' drive of the city.

Prices rose fastest in Phillip Island. As new resort towns spread along the Bass Strait coast, the median price of a house at Smiths Beach jumped from $70,000 in 1995 to $324,000 a decade later. Prices virtually quadrupled anywhere that people were allowed to build along the island's south coast: in Sunderland Bay, Surf Beach, Cape Woolamai and Newhaven.

Things were not bad on the island's northern coast either, more than trebling in Cowes, Rhyll and Ventnor.

Beach houses along the Western Port and South Gippsland coastlines also more than trebled in price. At Corinella, the median price jumped from $62,500 to $229,750, and prices took off in almost every town along the coast: Coronet Bay, San Remo, Cape Paterson, Inverloch and even some inland towns, such as Wonthaggi and Toora.

It was similar on the Mornington and Bellarine peninsulas.

The median price almost quadrupled in Sorrento, soaring from $150,000 to $590,000, and trebled or better virtually everywhere else. Even in blue-collar Hastings, it shot up from $72,000 to $216,000.

Portsea still boasted the most expensive real estate outside Melbourne, with the typical house last year selling for $900,000 (the same as in Middle Park, and just less than Malvern).

Lorne was the rising challenger, its median price soaring from $192,000 to $720,000, roughly matching Hawthorn.

But head inland, and it was another story. Take Minyip: a small town in the Wimmera, 56 kilometres north-east of Horsham, population 475 and falling. Back in 1995 it was already one of the cheapest places in Victoria to buy a home, with a median price of just $39,750. A decade later that had risen only to $42,125, and Minyip was the cheapest town by a mile.

In the Wimmera and southern Mallee, most real estate is cheap: $55,000 in Rainbow, $56,000 in Wycheproof, $68,000 on the Western Highway at Kaniva, $88,750 further south in Casterton. The closer you get to Melbourne, the more prices have risen: 141 per cent in Bendigo, 155 per cent in Ballarat, 169 per cent in Geelong.

Prices generally rose more in eastern Victoria, but there was an exception: Bonnie Doon. In 1995, before The Castle showed us "the serenity" of its hero Darryl Kerrigan's holiday home there, real estate in Bonnie Down was doing fine. The Castle might have been one of the best comedies Australia has made, but it did nothing for Bonnie Doon, where prices have risen just 52 per cent in a decade, about a third of the statewide growth.

Within Melbourne, the fastest growth was in the newly fashionable suburbs of the inner west and down south along the bayside. On one side, Yarraville's median price jumped from $110,000 to $365,000. On the other, Carrum's median shot up from $94,250 to $315,000.

Of all suburbs, Heatherton recorded the biggest jump in prices, from $110,200 to $459,200 - but that was due to the new housing estate created next to Kingston Heath golf club.

The suburbs where prices trebled or more during the decade were mostly in four clusters: the inner west (Newport, Spotswood, Yarraville, Footscray), the southern bayside (Carrum, Bonbeach, Chelsea, Edithvale), the inner-to-middle north (Fairfield, Heidelberg West, Coburg, Preston), and the inner-to-middle south (Elwood, Glen Huntly, Murrumbeena). All are spillover areas: those suburbs buyers look to as prices force them out of their first-choice areas.

But, except along the bay, few suburbs more than 10 kilometres from town featured among the fast risers. In Taylors Lakes, Keilor Downs, Croydon North and Belgrave South, median prices rose less than 100 per cent over the decade.

On average, houses in the five inner municipalities (Maribyrnong, Melbourne, Yarra, Stonnington and Port Phillip) rose in value 195 per cent during the period. In the next ring of inner-middle municipalities (including Hobsons Bay, Moonee Valley, Moreland, Darebin, Banyule, Boroondara, Glen Eira and Bayside), they rose 179 per cent. But the increases were less further out, and lowest on the urban fringe.

That tells us that people want to live close in. Or near the sea. Or both.

-- With MIKE PRESTON

THE HIGHS AND LOWS

Victorian housing in 2005

MOST EXPENSIVE

Houses: Toorak, median $1.71 million.

Apartments: Brighton, $531,001

Beyond Melbourne:

Houses: Portsea, $900,000.

Apartments: Anglesea, $465,000.

CHEAPEST

Houses: Frankston North, $170,000.