As Sydneysiders are forced ever outwards from the CBD in search of affordable property, an increasing number of Melbourne suburbs are joining the ranks of residential housing with million dollar plus price tags.
Homebuyers in Sydney are travelling up to 40 kilometres from the city centre in order to find a suburb where median house prices are less than $500,000. And in some cases, house prices in postcodes up to 75 kilometres from the CBD are topping the $1 million mark.
Realestate.com.au chief economist Nerida Conisbee says 361 Sydney suburbs currently have $1 million plus median house prices, representing 51.9 per cent.
And it’s not just further out you need to venture in Sydney now, but also further out in every direction.
Senior research analyst with CoreLogic Cameron Kusher says, “Five years ago – it varied a bit based on direction – but you could still buy homes in Sydney under $1m about 8km from the city. Now that’s impossible. In Sydney, you can see how much affordability has deteriorated.”
Moving on to Melbourne
The story is starting to look rather similar for Melbourne, where 30.3 per cent of Melbourne suburbs (124 in total) now have seven figure medians according to Conisbee.
Much like its northern neighbour, Melbourne’s millionaire property price march is spreading out from the CBD in all directions.
Suburbs like Research, Oak Park and Lower Plenty, creeping out up to around 15 to 20 kilometres from Melbourne city in one direction, and Edithvale, Aspendale and Chelsea in another, are rapidly joining the millionaire median house price ranks.
Families looking for more space, but still wanting to be close to the city for work and play, are the ones powering this latest price push, according to Conisbee.
“That buyer is probably looking for space and is prepared to do a bigger commute or work in the area,” she says.
Meanwhile, buyers seeking a closer commute can still find a few hidden gems in and around suburbs like Footscray and West Footscray, where a full-blown suburb ‘repatriation’ has yet to take hold.
“Footscray is only 6km from the city and is probably one of the few areas close to the city where you can buy for under $1 million,” says Conisbee.
But this isn’t going to be the case for much longer, with some of the suburbs next in line for the million-dollar club only needing around 10 per cent growth to sneak across the line.
Meanwhile, homeowners in Melbourne’s bayside suburb of Chelsea, on the way to Frankston, are seeing a remarkable surge in fortunes as their homes realise rapid value growth, and prices creep into the million dollar plus range.
And what about elsewhere?
Not surprisingly, with Melbourne and Sydney acting as the hubs of industry, commerce and generally more opportunities for employment, entertainment and lifestyle, this encroachment of million dollar property prices hasn’t been as obvious elsewhere around the nation.
In Brisbane, just 6 per cent of suburbs are fetching medians of $1 million or more, while in Perth it’s 11 per cent and in Hobart…well, there’s no such thing as a million dollar median suburb apparently.
As with most things property, Sydney is clearly the frontrunner when it comes to the millionaire’s club.
In fact, the wealth we have seen poured into the Harbour City and surrounds over the past few years has been nothing short of spectacular! Including a bucket load of money from foreign investors.
Some industry watchers warn however, that Sydney is starting to come off the boil, whereas Melbourne’s economy will continue soaring to new heights due to rapid population growth (2.4 per cent compared to 1.5 per cent for Sydney).
Chief executive of residential at the nation’s biggest housing developer Stockland, predicts that Sydney and Melbourne will pull further ahead than the other capitals as time marches on.
“(They) are the global gateway cities and will continue to see an increase in million dollar suburbs.
Of course how quickly they’ll pull ahead will largely depend on how much longer interest rates remain so low. Bill Moss, former head of property for Macquarie Group says with regard to the inevitable interest rate rise, somewhere on the horizon, “Winter is coming, we just don’t know when.”