Melbourne Suburbs With The Biggest Premiums

Three Melbourne suburbs have been named in the list of houses with the largest house premiums in a CoreLogic report focused on house and unit prices.

Armadale, Hawthorn and Carlton all made the list, which looks at the price difference between apartments and houses, along with five suburbs in Sydney and two in Perth.

While the median house price for Armadale is $2.96 million, the median unit price is $626,946 according to CoreLogic data.

Likewise in Hawthorn the median house price is $2,653,509 while the unit median price is $583,595.

While in Carlton the median house price is $1,649,007 while the unit median price is $372,883.

CoreLogic Research Director, Tim Lawless said many of the suburbs with the largest house premium are very affluent markets, but this also offers opportunities for apartment buyers..

“Homebuyers attracted to these blue-chip suburbs who can’t afford a freestanding home may be attracted to the significantly more affordable price point to get into a high-end suburb,” he said.

The CoreLogic data also revealed the suburbs where there is the smallest difference between houses and apartment prices.

With the smallest house premium, this included the Melbourne suburbs of Doveton with a median house price of $587,219 and Altona North with a median price of $889,549.

“House prices have moved out of reach for a growing portion of the population, especially those seeking a first home or lower income households.

“With housing affordability remaining a key challenge across Australia, the substantially lower price points across the medium to high density sector are likely to become increasingly in demand as buyers become more willing to sacrifice space for proximity to essential amenities,” Mr. Lawless said.

“Alongside lower prices, medium to high density housing options are often strategically located close to transport networks, major working nodes and high amenity precincts.”

Overall house prices in Melbourne have risen in February by a subtle 0.1 per cent with a median value of $778,941.

This rise follows three months of negative monthly movements according to CoreLogic’s Hedonic Home Value Index released on March 1.

This slight rise in price has Melbourne sitting as the fourth most expensive capital city in Australia with Sydney ($1,128,155), Canberra ($840,103), and Brisbane ($805,593) all recording higher median prices.

On the rental side of the market a “seasonal phenomenon” has seen rental values re-accelerated through early 2024.

Rent increased with a monthly pace of change rising 0.9% in February which is the highest since March 2023.

The report also revealed this increase saw the rolling quarterly change in rents rise to 2.4 per cent, the highest since May 2023.

For Melbourne the gross rental yields for dwellings was in line with the national average for combined capitals at 3.5 per cent.

However, this did make Melbourne the second lowest of all capital cities except Sydney (3 per cent) with Darwin recording 6.6 per cent, Perth at 4.6 per cent Canberra 4 per cent and Adelaide and Brisbane recording 3.9 per cent.

Melbourne did record the second highest annual change in rent for houses with 11.3 per cent coming second only to Perth at 13.5 per cent while the next closest was Sydney at 8.9 per cent.

The annual change in rents for units in Melbourne was slightly less at 10 per cent making it the third highest change among the capitals following Perth at 16.5 per cent, Brisbane at 12.3 per cent and Sydney at 10.2 per cent.

The report said, “acceleration in rental trends is being driven by the detached housing sector.”

The annual rental growth in houses has been trending higher since October 2023, while the trend in unit rents is moving in the opposite direction, easing from a recent peak in April 2023, when unit rents were up 14 per cent. Since then annual growth in unit rents has reduced to 9.6 per cent.

“Although growth in unit rents is slowing, we are still seeing the cost of renting across the unit sector rising at a faster rate than houses across most jurisdictions,” Mr. Lawless said.

“A slowing in the pace of unit rents lines up with the peak in net overseas migration in the first quarter of 2023.

“However, worsening affordability pressures could be another factor in this sector, given unit rents have surged 24.1 per cent higher over the past two years compared with a 16.6 per cent increase in house rents.”