Most affordable suburb in Melbourne is the ultimate catch-22 for first-home buyers

If Millgrove, a once overlooked suburb in the ferny reaches of the Upper Yarra Valley, isn’t the classic case of a first-home buyer catch 22, then nowhere else is.

Only last Friday in the Domain Group’s first-home buyer report, little Millgrove was named as the most affordable place for entry buyers within cooee of Melbourne. A 70 kilometre commute apparently fits that definition.

The hamlet’s median, the report told, was $295,000; about $100,000 below what is considered the absolute outer limit of a first home buyer budget of $412.000.

That makes Millgrove sound just great. The catch: there is no stock.

And even when something comes onto the market, Professionals Warburton and Yarra Junction director Ashleigh Hall says “normally they don’t get to the second open (for inspection). All properties have multiple buyers and we get multiple offers”.

Recent cases in point: 6 Bedford Street, with three bedrooms and one bathroom. “Sixteen groups came to the first open and it was sold within the first week,” says Hall. In a lovely garden, 39 Christine Street was last week priced at between $350,000 and $380,000. “Again, multiple buyers and multiple offers.” It is already under contract for $365,000.

Teasingly, Hall tells that he has only just signed up two properties, “neither of which are ready for photos”, but both will be in the entry buyer ballpark. “One for $260,000 to $280,000 but it needs a lot of work. The other is a decent brick home for $290,000 to $310,000”.

When these houses do hit the listings, they’ll probably perform like all the rest, as if they are the hottest property tickets in town; selling before anyone who vaguely hesitates has a chance to make a bid.

As it happens, however, Tony Fanfulla of Bell Yarra Junction, has a live and quite lovely little weatherboard property on his books and it might still be available by this weekend. The former rental, three bedroom house is 15 years old and is situated opposite the roiling Yarra River on River Road.

It went up last Friday and by Saturday, he says, and despite “being a bit above the median”, had attracted the usual interested parties including a young female buyer who compared it very favourably with a one bedroom apartment she might be able to buy in South Yarra. “She thought it looked like very good value.”

Millgrove, Fanfulla says, was established as a suburb of “very simple, affordable housing in the 1970s”, and has evolved as a family-friendly housing corridor “and a nice place to live” between Yarra Junction — where the shopping and school infrastructure is — and Warburton four kilometres further up the road, “and more of a holiday, tourist town with a $400,000 median”.

It might have renown as the cheapest stock in the Upper Yarra, yet as the rapid stock turnover indicates, Millgrove is drawing in crowds of first-home buyers who, Hall says, make up 50 per cent of the market, and retirees. “Actually,” says Fanfulla, “it’s a mix of everyone.”

The red hot property performance that he says means few offerings last longer than three to four days days, has seen the prices rise by stunning degrees. Fanfulla estimates Millgrove has gained 50 per cent in three years.

“And it will keep rising. It won’t stop. In another three years, the median will be $400,000 which means all those first home buyers who get in now will have some good equity in their homes.”

The catch is … getting in. “I’ve been in the Yarra Valley market for 15 years,” Hall says, “and there has never been a time like this.”