Melbourne suburbs tipped for growth in 2021

author-avatar By on December 18, 2020
Melbourne suburbs tipped for growth in 2021

After a torrid year, Melburnians will be looking to bounce back in 2021, and the property market may just do that.

Victoria and Melbourne walked a path perpendicular to the rest of the country for the most of 2020. While most of Australia quashed COVID-19, Melbourne suffered a serious prolonged outbreak.

Consequently, property prices held up reasonably well across Australia, rendering the doomsday 30%-market-crash predictions from some economists obsolete.

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

Property prices rose in every capital city in the September quarter, according to the Australian Bureau of Statistics (ABS), apart from Melbourne, where prices were down 0.3%.

Melbourne’s median house price now sits at $700,000, from $720,000 in the previous quarter.

However, reports suggest the biggest price falls may be behind the Victorian capital.

ANZ forecasts Melbourne will see growth of 7.8% in 2021, albeit lagging behind the other capitals, while Buyer's agent platform BuyersBuyers.com.au forecasts the city will see growth of 8-12%.

SQM Research forecast a more pessimistic outlook of growth of 2-6%, in a best-case scenario.

So what locations are set to be the biggest beneficiaries of this price growth? We asked the experts for their top picks for Melbourne suburbs to see growth in 2021.


Melbourne suburbs tipped for growth in 2021:


Springvale

Kirk Simpson, Director of Lucra Real Estate, said Springvale was a little-known suburb set to take off given its proximity to high-value locations.

“Springvale is a little suburb based in Melbourne’s eastern suburbs but is growing hugely in popularity due to its close location to very expensive suburbs like Oakleigh and Bentleigh and is very popular with the Vietnamese community,” Mr Simpson told Savings.com.au.

“This suburb is not on the radar yet but is showing signs of great growth as the older community start to sell and developers are looking to supply the huge demand of buyers and based on a recent sale, we completed which resulted in 52 offers being made this is one suburb you would want to keep your eye on.”


Sunbury

Mr Simpson said Sunbury’s proximity to the CBD and it’s regional atmosphere, meant it would continue its trend of providing solid growth.

“Located only 40 kilometres from Melbourne CBD and being right in the heart of Melbourne’s largest airport, which is undergoing a huge transformation, this tranquil suburb offers country-style living with big-city amenities.

“I have been selling homes in Sunbury for the last 6 years and despite huge growth already this suburb still offers great value for money which is why we have received so many enquiries for every property we list.”


Footscray

Despite its recent influx of big money, Mr Simpson said Footscray was still a place to grab a bargain, but buyers needed to be quick.

“This thriving suburb is so close to the city and yet is very overlooked despite the number of luxurious apartments being built as well as some property giants that are expanding into this area with multi-million-dollar builds.

“Even with the beautiful water views, you can still pick up a bargain, as many of my clients have bought previously nominated sales at a discounted price with great valuations.

“If you want to get into a suburb so close to the city at a great price then keep your eye on Footscray as I believe soon it will be out of most buyer’s price range.”


Watsonia North & Coburg North

Lloyd Edge, real estate expert and author of best-selling property book Positively Geared, said Watsonia North and Coburg North came in at Melbourne’s median price range and could see strong growth next year.

“Both suburbs have a median price of around $700,000, much lower than many Melbourne suburbs so there is plenty of room for growth,” Mr Edge told Savings.com.au.

“They are far enough out where people will be looking for larger dwellings, not so much apartments, as a result of the pandemic.

“Coburg should benefit from the ripple effect of other suburbs nearby which are more expensive.

“Watsonia North has seen little action but once developers go in and start subdividing more blocks, this should bring the suburb to the forefront of Melbourne’s growth.”


Bentleigh East

Simon Wood, Director at Buxton Bentleigh Real Estate, said Bentleigh East had already seen growth of 17% post-lockdown, and this trend would continue into 2021.

“This is due to the high demand for zoned primary schools and secondary colleges with potential buyers doing more research and buying specifically into highly sought after primary school zones, such as the Coatesville Primary School Zone to set their family up for the long term,” Mr Wood told Savings.com.au.

“There is also a high demand for houses near shopping strips and parklands. If you drive through any of the local shopping areas, it is always a hive of activity, there are coffee shops along every strip and they are always full.

“The suburb has terrific sporting facilities with numerous sports grounds and playgrounds, as well as one of Victoria’s best sandbelt golf courses in Yarra Yarra.

“Bentleigh East has large blocks of the land which lend itself to a considerable amount of new developments, including apartments, side-by-side town residences, and new single homes.”


West Footscray

Real Estate Buyers Agents Association (REBAA) President Cate Bakos, said West Footscray provided larger living spaces for a lower price tag, which would attract serious interest next year.

“COVID has shown we can work from home and a lot of people want a bigger house with a study,” Ms Bakos said.

“West Footscray houses are in the inner ring and people who are looking for an extra bedroom or extra living area will find that here, for sub $1 million.”


Dandenong foothills

Ms Bakos said first home buyers and government incentives would see strong growth for suburbs in the Dandenong foothills.

“We're going to see a lot of first-time buyers and upgraders taking advantage of the stamp duties discount available, as under a million dollars, you get 25% off established homes and 50% off new.

“I think we’ll see some impressive growth around the foothills of the Dandenong, so suburbs like Boronia, Croydon, and Lilydale, because they have an established market under the million-dollar mark.”


Bayside region

Nathan Jones, chief executive of Buxton Real Estate, said suburbs within the proximity to the bay had been seeing a great deal of attention and activity. These suburbs include Brighton, Hampton, Sandringham, Black Rock, and Beaumaris.

“Always popular, the Bayside lifestyle is the envy of inbound migration, and the recent success of The Block has placed an even larger spotlight on this popular destination,” Mr Jones told Savings.com.au.

“Exceptional schools and culinary options dominate the wish list for most Bayside seekers. With a strong ‘support local’ community atmosphere, including some of the bay's best beaches, we anticipate further heavy demand in the area well into 2021.”


Kingston region

Mr Jones said Chelsea, Aspendale, Edithvale, Bonbeach, Carrum, Seaford, Cheltenham, Highett, Mentone, Parkdale, and Mordialloc, in the Kingston region, would all see strong growth next year.

“Further around the bay, there’s a collection of more affordable beachside suburbs where quality family accommodation can be acquired at a reasonable discount to its inner-city counterparts.

“We expect to see movement and migration from inland suburbs to these lifestyle destinations due to the quality of the beaches and the access to a wide selection of both private and public schools.”

Ms Bakos echoed Mr Jones sentiments and said Bonbeach, Carrum, and Chelsea’s beach lifestyle and cheaper price tags, would see it spike in popularity next year.


Glen Eira region

”This municipality headlined by Bentleigh, McKinnon, and Elsternwick is also seeing great momentum and activity and has done for some time,” Mr Jones said.

“The proximity to the beach, Port Phillip Bay hospitality, and Bayside living are some of the reasons these suburbs remain towards the top of the list in any market conditions.

“In conclusion, the common themes here are; quality real estate, proximity to the beach, and some of Melbourne’s best schools, making up the big three atop almost everyone’s lifestyle checklist.”


Photo by Pat Whelen on Unsplash

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Alex joined Savings.com.au in 2019. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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