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bankofmelbourne.com.au/private
bankofmelbourne.com.au/private
The Australian property
market has reactivated
over the past two years,
driven by historically low
interest rates.
By Dr Andrew Wilson
Dr Andrew Wilson is Domain Group Senior Economist
Twitter@DocAndrewWilson
The Iconic
Peninsula
Unique
opportunities in
prestige property
T
he sharp improvement in affordability
has released pent-up demand at various
levels in most capital cities and property
prices have risen at the fastest rate in
four years, with the Sydney market experiencing a
decade-high boom in prices growth.
The budget and middle markets have been
the strongholds of buyer activity with investors
particularly active, chasing the re-emergence
of capital growth most notably in Sydney.
Changeover buyers have also been active in
mid-price ranges as the irresistible force of low
mortgage rates and value opportunities from
previously subdued market conditions have
created significant momentum.
Although housing markets have generally
reactivated over the past two years, the rate
of prices growth has reflected local market
conditions with some markets clearly performing
better than others. Sub-market performances have
also been mixed and the clear underperformer
has been prestige property at the top end of the
market.
Despite reasonable economic performance
since the global financial crisis (GFC), the wealth
effect has generally been missing, with highend discretionary purchases a casualty of this
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conservative environment. A key signal indicating
the general lack of drive in prestige property
activity is the performance of the local stock
market. Australia’s stock market remains around
15 per cent below its previous peak recorded in
2007, highlighting strong economic growth during
that period. Similarly, overall prices in the prestige
housing market remain below the previous peak
levels of four to seven years ago.
Given the generally subdued nature of prestige
property, value opportunities remain in what are
definitively iconic properties in prime locations.
Melbourne’s Mornington Peninsula has traditionally
been the holiday playground for the local metropolis
and provides a range of property types and values.
Although the spread of Melbourne suburbia has
now reached the Peninsula and it can now be
considered part of the general metropolitan area,
the southern coastal and inland rural parts of the
Peninsula maintain their cache as prestige holidayhome, weekender or retirement locations.
Portsea, unsurprisingly, maintains its mantle as
Melbourne’s ultra-prestige, local, holiday destination,
featuring abundant luxury properties within its
environs. Sorrento also provides numerous luxury
holiday homes and weekenders, taking advantage
of its bayside lifestyle and proximity to the city.
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Domain
Other niche prestige locations have emerged
on the Peninsula over recent years with luxury
home development adjacent to the coastline.
With a flurry of ultra-luxury properties having
been constructed in the past decade, St Andrews
is a small prestige pocket located between Rye
and Sorrento.
Seaside prestige properties are not the only
iconic locations for luxury real estate on the
Peninsula. A number of substantial homes have
been built within the semi-rural environments of
Red Hill, Bittern, Flinders and Balnarring. Small
wineries and hobby farms are located within
these picturesque districts, enhancing the
European-style, rural atmosphere.
Luxury seaside and adjacent rural property
pockets are also to be found on the southern
Peninsula at the small coastal hamlets of Point
Leo and Somers.
Despite a recent increase in buyer activity,
prices growth in a number of these areas has
been subdued.
Over the six months ending September 2014,
the top Peninsula suburbs by median house
price were led, unsurprisingly, by Portsea at
$1,300,000 from 25 sales. Next highest was
Flinders at $830,000 from 15 sales, Sorrento
at $790,000 from 55 sales, followed by Mount
Eliza at $770,000 from 185 sales and Fingal at
$730,000 from 18 sales.
Longer-term prices growth in Portsea, however,
remains subdued with the median house price
still 10.3 per cent below that recorded in 2008.
Similarly, the median house price for Sorrento is
12.7 per cent below the level of three years ago
and Finders’ house prices are down by 16.8 per
cent over the same period.
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For buyers of luxury properties
in iconic locations, the postGFC, relatively subdued
prestige property market on the
Mornington Peninsula continues
to offer unique opportunities.
Top Peninsula
suburbs by median
house price:
$ 1.3 million
PORTSEA
$ 830 K
FLINDERS
$ 790 K
SORRENTO
$ 770 K
MOUNT ELIZA
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