Melbourne’s three most expensive suburbs – and where to look instead

It’s not uncommon to have your hopes set on a dream suburb when house-hunting, only to find that dream is well outside your budget.

But another interest rate rise last week, with the potential for more to come, means buyers may be looking for more affordable options.

Ray White chief economist Nerida Conisbee warned that tougher financing conditions could be ahead, albeit with some price relief, if the Reserve Bank continues to hike interest rates.

Competition in the first home buyer market, driven by incentives like the Australian Government’s 5% Deposit Scheme, would also push many buyers further out, she said.

But there are options for many of Melbourne’s most desired suburbs that can offer the same lifestyle for less.

Melbourne’s three most expensive suburbs are Toorak, Canterbury and Brighton. Here’s where to look instead.

Toorak

Toorak was top of the list for median house prices in Melbourne in the December quarter, at $4,125,000, and number five for unit prices, at just over $900,000, according to Domain data.

The suburb has been home to Melbourne’s affluent families for a long time, Kay & Burton Stonnington’s Oliver Booth said.

Booth said buyers looking for a similar lifestyle should explore nearby Prahran ($1.71 million median house price), Armadale ($2,125,000) or Malvern ($2,635,000).

While those prices may still make the average buyer wince, they’re all at least $1.4 million less than Toorak and “offer you plenty”, he said.

Canterbury

Second on the list for house buyers is Canterbury, with a median house price of $3,675,000.

Marshall White Boroondara’s Stuart Evans attributes its popularity to a combination of transport options, access to schools and its affluent heritage.

So where should Canterbury aspirants look for similar qualities?

“Any buyer looking in Canterbury would probably be open to the right home in Deepdene or Camberwell,” Evans said. “And just on the other side of Burke Road, Kew and Hawthorn East.”

He noted they all also have consistent capital growth, with Kew the lowest at 19 per cent and Camberwell almost 25 per cent over the past five years, and all for at least $1 million less.

Brighton

Further south, Brighton had the highest median unit price ($1.28 million) and was number three for house prices ($3 million) in the Domain data.

“Brighton ... gives you direct access to the beach as well as that ultra-premium suburb,” Belle Property Brighton’s Sam Inan said. “It’s the zenith of real estate in Melbourne.”

For those who can’t quite reach the zenith, Inan said St Kilda ($1,527,500 median house price) and Elwood ($2,025,000) are nearby, more affordable and have greater density. But for him, they don’t tick all the boxes.

Inan recommends Hampton ($2,202,500) as somewhere that comes closer.

Hampton

However, Hampton has the third-most expensive units in Melbourne at a $918,000 median unit price.

Amanda Thomson, from Hodges Real Estate Sandringham, said Hampton’s units were popular because of their beach access and similar amenities to Brighton.

As an alternative, Thomson suggested Mentone: it’s just further south, still on the beach and almost $300,000 cheaper.

“You can get a little two-bedroom villa unit with a small garden and a little bit of land,” she said, recommending older, cream-brick units from the ’50s and ’60s.

Mount Waverley

To the east, Mount Waverley is a popular choice for those who are looking for the qualities of a home on a unit block. The suburb had the second-highest median unit price, at just over $1 million.

iSell Group agent Ricky Nguyen said the area was becoming unaffordable for full-sized homes, and low maintenance units were bridging the gap for buyers, which was pushing unit prices up.

But he said unit buyers had plenty of alternative options.

“You’ve ... got Clayton [$570,000]. They can even go further down to Clayton South [$515,000], or to Springvale [$600,000],” he said.

At almost half the price, Nguyen said buyers can get something larger and more modern for much less.

For lifestyle

When ranking suburbs by lifestyle rather than price, East Melbourne was recently named the most livable suburb in Melbourne (if money was no object) by KPMG.

If money is an object, Ray White CRE’s Elli Blanco recommends apartment buyers head just a few hundred metres north or east.

“A lot of people are initially looking in East Melbourne, but end up in either Collingwood or Richmond,” he said.

While the median value for a unit in East Melbourne is $769,262, Collingwood is about $77,000 less ($691,950), and Richmond is about $120,000 less ($642,716), Cotality data shows.

“For the size, the light, the views ... you can probably get more bang for your buck,” Blanco said.

Further west

The only suburb on the KPMG livability top 10 with a median house value under $1 million ($950,193) was Footscray.

Village Real Estate agent Joseph Luppino said that wasn’t surprising, despite being around $500,000 less for a house there than in any of the other suburbs on the list.

“It is a genuine hub that you can live in comfortably, day-to-day, week-to-week,” he said, listing its shopping district, well-connected train station, and diversity as major assets.

His recommended alternative, with a small step down in median value to $924,047, was Maidstone, but he noted that it doesn’t have the same connections or access to amenities.

Ray White’s Conisbee said there was an inevitable ripple effect as hopeful buyers were pushed further out by rising prices.

“Typically a suburb does well, and it starts to see really strong growth,” she said. “People get priced out of that suburb, and then move on to the next one.”