Melbourne's prestige property market picks up with eyes on traditional Toorak and further afield
The exclusive Melbourne enclave of Toorak is the place to be for aspiring mansion owners, but this year buyers were also willing to fork out eye-watering sums to be in other neighbourhoods.
There’s no one hot new suburb about to replace Toorak’s grand tree-lined boulevards. Instead, unique properties are catching purchasers’ eyes.
With few homes listed for sale and both buyers and vendors shrugging off the uncertainty of the relatively quiet pre-election period, insiders say the prestige market is particularly property-specific right now.
Some luxury pads were snapped up within days, while others had to be patient for the best part of a year.
Upscale buyers’ agent David Morrell says some owners are hesitant to sell, worrying there will be nowhere to move to with a dearth of listings.
“We’ve suffered from a lack of transactions in the prestige market, which has really been one of the major problems,” he said.
“The number in the prestige market would be less than half. It’s also very property specific.”
Some sellers have had to accept discounts, but he cited cases of homes fielding strong demand from neighbours accumulating a land parcel or protecting their privacy from possible new development.
Next year, he tips prices will depend significantly on the quality of the property on offer, compared with boom markets where a rising tide lifts all boats.
The biggest Melbourne deal to come to light in 2019 was the $36 million off-market transaction of a South Yarra abode near the Royal Botanic Gardens.
Although the sale was technically struck in December last year, it was first revealed by Domain this February after AFR Rich Lister and founder of foreign exchange broking company Pepperstone Owen Kerr slapped a caveat on the residence. Vendors were the Blythe family, once of Spotless Group fame, and Kay & Burton were the selling agents.
Another intriguing non-Toorak sale was in Armadale, where the former Golden Crust Bakery had been converted into a luxury compound.
The unusual home boasted an architect-designed renovation, an oversized land parcel, a separate self-contained pad for teenagers or guests, and all the mod cons. Listed with a price guide of $17.3 million to $19 million through Marshall White, it is understood to have sold for at least $17 million.
And in the upmarket coastal holiday town of Portsea, a waterfront home traded for $19.8 million just days after hitting the market, through Sotheby’s Peninsula International Realty.
Marshall White’s Marcus Chiminello is diplomatic about the year that was. “It’s improved,” he offers. “We’ve seen an emergence post-election of positive signs and people willing to make commitments.”
With low interest rates and low inventory, he says the buoyant spring for the lower end of the market has started to instil confidence in the top end.
He is preparing to offer for sale the penthouse at 29 Washington Street Toorak, sold about 18 months ago for $14 million, with a new price guide likely to be at least $17 million.
“It transacted in a time when the market was very fickle … there are a lot of clients in hindsight who regretted not throwing their hat in the ring.”
Not to be outdone, Toorak held its own with a rush of significant sales towards the end of the year.
A $15 million-plus sale became part of a bigger story when the family of Chemist Warehouse co-founder Jack Gance bought the block next door to another pile they purchased a year earlier. While a future vision for the $30 million-plus site at 7 and 9 Yar Orrong Road handled by Kay & Burton has not yet been revealed. There is already a demolition permit for one of the properties and insiders suggested one new house could be created on the super-block.
Just streets away, a landmark holding on Heyington Place found a buyer for a price understood to be in the mid-$20 millions through Marshall White.
It was first listed in the spring of 2018 with a guide of $27 million to $29.5 million, later reduced, through a different agency.
Kay & Burton’s Ross Savas is seeing pent-up demand after people sat on their hands for some time, with a “very slow” market before July.
“Vendors were not interested in going onto the market because of everything that had occurred in the past 12 months – royal commission into the banks, the election,” he said.
“But in the second half of this calendar year, the market’s gaining some confidence.”
Although there were few properties on the market, those that were listed have sold and sold well, he said.
“The outlook, for me, next year is very bullish.”
Andrew Macmillan of Jellis Craig saw a string of unsold houses change hands quickly after the federal election and changes to lending standards.
“In 35 years, I’ve never seen a market rebound so quickly,” he said.
But the critical issue for anyone in the $5 million-plus market is whether they can buy something new after selling their own house.
“[The market] can’t move forward without more supply coming.”
RT Edgar director Sarah Case warns of another factor in the lack of listings: houses on main roads are being knocked over for multi-storey developments.
“[This is] creating again less houses for these buyers to purchase,” she said, “whereas, in the past, buyers that couldn’t afford AAA Toorak or even AA positions could buy on these main roads at a much lower rate but still be close to the great schools shops and public transport.”
AVA Property director Trevor Crittle, who values prestige homes, says land values generally have not yet returned to their peaks despite the pick-up in the market.
“There have been some really strong new house sales because building costs kept going up,” he said.
“People don’t seem to be paying as much for the land … Toorak and Kew haven’t got back to what they were.”
Even in the luxury apartment market, the focus was on St Kilda, where the penthouse in Tim Gurner’s Saint Moritz project had an asking price of $30 million. Mr Gurner said at the time he was “extremely happy” with the sale result, although the contracted price is not yet publicly available.
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