Suburbs with median house prices below $400,000 are now extinct in Melbourne.
CoreLogic figures show prices in the city’s most affordable postcodes jumped as much as $1600 a week last year, despite home prices dropping across most of the city.
The growth was enough to push prices past $400,000 in the city’s last affordable havens — Millgrove in the Yarra Ranges about 60km to Melbourne’s east and the Melton region on the city’s western fringe.
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CoreLogic Australian head of real estate Geoff White said the fact the median in Melbourne’s cheapest suburb, Millgrove, had skyrocketed $1600 per week to $409,000 meant certain buyers could no longer “stretch themselves” the extra $20,000 needed for a deposit.
“But you still get a lot of value for money,” Mr White said.
“This is an example of where buyers have thought: ‘I need to and want to buy something and if that’s the area it’s got to be, then so be it’.”
Bell Real Estate’s Rebecca Doolan said Millgrove continued to see “really good results”, and buyers were still finding a way to get a foot on the property ladder there.
“It’s definitely a market where people who are on their own can still buy in,” Ms Doolan said.
Two single buyers had recently inspected a home at 17 Patricia St, Millgrove, she said.
The tenanted three-bedroom house comes with a $400,000-$440,000 asking price that marks it as a typical home for the suburb.
The city’s next most affordable suburb, Melton, now has a $410,000 median house price after a 14.5 per cent jump last year.
Nearby Melton South, Melton West and Kurunjang are also now above $400,000.
The CoreLogic figures show Melbourne’s citywide median house price was $723,000 at the end of November last year after falling about $11,000 across the traditionally strong spring selling period.
RMIT property professor Chris Eves said a rise at the bottom end was “usually what happens when we see the market turn”.
The fact homes were taking longer to sell had encouraged first-home buyers who had been “put off by the heat of the market to come back”.
“They just don’t like buying at auction. It’s too unknown and risky, and we haven’t seen them have a chance like this in a long time,” Prof Eves said.
He expected the growth to ultimately plateau without other buyers to compete against first-timers in the market.
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MELBOURNE’S MOST AFFORDABLE HOUSES
Millgrove — $409,000, up 25.8%
Melton — $410,000, up 14.5%
Melton South — $411,750, up 15.7%
Kurungjang — $432,000, up 19.5%
Melton West — $450,000, up 13.9%
*CoreLogic median house annual price growth