Properties in Melbourne's fringe suburbs are increasingly attracting stronger price growth than those in blue-chip areas, prompting some real estate experts to warn that buyers may be overpaying for secondary locations.
The most affordable areas of metro Melbourne have ramped up as the city's price-growth leaders this year. Many have generated double-digit growth in their median house prices in the past 12 months.
The trend has seen Ashburton this month achieve it first $3 million house sale. The eastern suburb, 12 kilometres from the CBD, is traditionally ranked as a bridesmaid area to Camberwell.
Big prices are also being paid for homes in Brighton East, Cheltenham and Hampton, while some properties in the more exclusive locale of Brighton are selling at fair-value levels.
Adam Woledge, an architect with the buyers' advocacy company Woledge Hatt, said a growing proportion of owner-occupier buyers were purchasing in suburbs they were unfamiliar with.
"Buyers need to be careful with the fringe suburbs," he said.
"You can actually get better value if you stick to the key suburbs - Brighton versus Brighton East, for example, or Glen Iris versus Ashwood or Kew versus Balwyn North."
Mr Woledge said he had seen prospective buyers in Malvern miss out on auctions in that suburb, and then overpay for properties further out. "All of a sudden buyers are giving up on Malvern and are going out to Bentleigh, but they are taking their Malvern budget with them and it is influencing prices."
Another buyers' advocate, Janet Spencer from Buyer Solutions, said there was a clear trend to buyers paying above-market prices in emerging areas of the western suburbs.
"There's a definite knock-on effect in areas within a 30-kilometre radius of the CBD," she said.
Ms Spencer said if buyers continued to bid up properties in spillover areas, it could create improved buying opportunities in the traditional, closer-in suburbs.
The market saw some tearaway results at the weekend but dozens of auction properties sold for sums modestly above reserve.
Hocking Stuart auctioneer Nick Gatacre fielded four bidders at the sale of a two-bedroom cottage at 50 Moore Street, South Yarra. On the market at $1.2 million, the house sold for $1,239,000 to a man bidding on behalf of his young adult daughter.
"In the past 18 months, the cottages have grown exponentially in price point in contrast to the apartment market," Mr Gatacre said. "That is one of very few cottages to have sold in South Yarra so far this year, whereas historically there would have been five or six already sold by now."
McRae Property advocate John Sommers bid unsuccessfully for a client for the Moore Street cottage. He said the final price "wasn't cheap but it was justifiable", adding that the inner-suburban market was seeing more properties sell for sensible prices.
Across town, two bidders fought for a smartly renovated balcony terrace at 751 Drummond Street, Carlton North. The Nelson Alexander-listed home was on the market at $1.975 million. It sold for a little more - $2,020,000.
In Brighton, there were four bidders for a villa unit at 4/30 Foote Street. It fetched $983,000, just above the flexible reserve of $950,000 to $975,000. Selling agent, Biggin & Scott's Trudy Biggin, said the three-bedroom unit handed a solid capital gain to the vendor, who'd paid $590,000 for the villa eight years ago and "done nothing to it".
Other homes soared at auction. Marshall White sold a 1930s residence at 23 Kinane Street, Brighton, for $530,000 above reserve. The sale price was undisclosed.
James Buyer Advocates principal Mal James said the market remained strong but was settling.
His firm tracks the bidder participation rates at auctions of higher-priced houses. On Saturday, it reported an average of 2.7 bidders at 23 auctions. On the previous weekend, the bidder participation rate slipped to 2.1 bidders per auction. These numbers are well down on the bidder activity levels seen during the height of the market in 2015 and early 2016.
"The inner Melbourne top-end market is just flattening a little," Mr James said. "It has dropped the turbo-boosters it had a month ago but it is still heading in an upward direction."
On Saturday, the Domain Group posted an upbeat clearance rate of 79.5 per cent from 1082 reported auctions. Agents did not report results for a further 247 scheduled auctions.
Many of these will be properties passed in on a vendor bid, which suggests that would-be buyers still have some wriggle room in the market.
