Melbourne’s coastal property prices boom as COVID-19 effect hits
The Mornington Peninsula used to be known as a quiet seaside holiday spot, away from the hustle and bustle of the city.
Until the COVID effect hit, and home-buyers looking to escape the coronavirus pandemic arrived en masse, armed with low interest rates and sending house prices through the roof.
Melbourne’s property market is red-hot and the biggest impact has been in coastal areas, where prices have skyrocketed.
The latest Domain House Price Report shows 17 suburbs along the Mornington Peninsula have risen by double figures over the year to June.
House prices in Somers, 26 kilometres from Portsea, soared by a massive 75.1 per cent to a median $1,706,750 – a jump of $732,000 in just 12 months.
Inner bayside suburbs such as Brighton East, close to the beach, also rose but by a more modest 16.1 per cent to a median above $2 million.
Domain chief of research and economics Nicola Powell said although the peninsula had always been popular for buyers, the pandemic had been supercharging the property market.
Cashed-up buyers were bringing forward decisions to move as they could work from home, and because they were unable to travel while international borders remained closed to stop COVID-19’s spread.
“Australians spend more on overseas travel than they do travelling domestically so we now have huge amounts of cash staying in Australia and that is absolutely being diverted into homes,” Dr Powell said.
McEwing & Partners director Dean Phillips said that, despite the huge jump in prices in Somers, the area had been underpriced and was now hitting the levels it should have been at prior to the pandemic.
“It’s still extraordinarily well priced for property, especially near the cliff top,” Mr Phillips said. “You can get a home there for $3 million that, in Mt Eliza, Portsea or Flinders, you’d pay $10 million or $20 million-plus for something similar.”
While the steady rise in the number of home buyers moving to the Mornington Peninsula is pushing house prices higher, it’s also changing the face of the once-sleepy seaside region.
Busy traffic, usually expected during the summer holidays, now happens all year round as more Melburnians move in, Home AU Real Estate’s Sheree Hay said.
The rush to the peninsula had intensified after COVID-19 hit, she said, with far more people looking for a permanent home and fiercely competing to buy.
“It’s no longer a seasonal market because people are not just there for the beach, but there’s an array of golf courses, eateries, wineries and things like that,” Ms Hay said.
Properties were being snapped up by buyers within days, with many determined to get their next home by offering well above the asking price.
“Houses are selling much quicker than before. There’s no deliberation – it’s a must-win sort of attitude,” she said.
The growing prices and population were pushing some locals, who believed the peninsula was far too busy and expensive, to sell up to move somewhere quieter like Inverloch, she said.
Kim Hutchins recently sold a Rye home she had owned for 16 years and bought another, but believes buyers looking to enter the peninsula market for the first time now could struggle.
Prices in Rye have jumped by 29.9 per cent over the past year, to a $935,000 median, data shows.
“When you’re selling in a sellers’ market you’re going to get more for your house and then pay more,” Ms Hutchins said. “If you were trying to get into the market initially it would be really hard.”
Ms Hutchins saw first-hand how hot the property market was along the peninsula, selling her home in just three days for above the asking price after a years-long renovation.
Demographer and director of Ethos Urban Chris McNeill said the changing face of the Mornington Peninsula was not unique and had happened in other areas such as tree-change hotspot Castlemaine, or “North Northcote”.
“Where there are surges in price growth, people will be displaced because of that, but some people will choose to relocate and cash in, because they won’t enjoy the changing nature of the area.”
Westpac senior economist Matthew Hassan said those who had bought in to a seaside suburb, were not only looking for extra space, they were also staying within an hour of Melbourne to allow them to commute.
“Living within an easier commuting distance from the city gives people optionality,” Mr Hassan said. “If they’d moved to somewhere like … a far flung coastal area then they would have further to travel back to the city.
“There’s also an element of just generally people being reluctant to move a long way further afield because they still want to be close to their family and friends and local conveniences like going to local sporting events.”
Ref: MELISSA HEAGNEY| SENIOR JOURNALIST (on 01 Aug 2021). Melbourne’s coastal property prices boom as COVID-19 effect hits. Retrieved from https://www.domain.com.au/news/melbournes-coastal-property-prices-boom-amid-the-covid-19-effect-1076621/.
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