Can’t buy a house? Townhouses, apartments or rentvesting could be the next best thing

Townhouses are surging in popularity in Melbourne’s outer suburbs as Victorians are priced out of the house market even 20km-plus from the CBD.

Buyers are rushing for an affordable entry point in Melton suburb Deanside, where townhouses can be snapped up for less than $500,000, while those intent on remaining in the inner ring turn to apartments or rentvesting to get a foot on the property ladder.

Avid Property Group general manager Peter Vlitas said eight of 11 townhouses at its Carolina Deanside development had been snapped up since it was launched just two weeks ago.

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Adjacent Caroline Springs’ median house price, comparatively, surged 10.9 per cent to $826,500 in the December quarter, according to Real Estate Institute of Victoria data.

It comes as REIV research reveals the suburbs with the biggest difference between median house and unit price, showing where buyers can nab a sought-after neighbourhood for less.

“Units” in the data set encompass flats, apartments, townhouses and villas.

REIV president Adam Docking said buying a unit could allow a buyer to enter the market in the same or surrounding area to where they rented.

Hawthorn’s $602,500 median unit price is $2.35m less than its median house figure, offering first-home buyers the chance to live in the lucrative inner east on a budget.

Belle Property South Yarra principal director Peter Perrignon said 13 of 16 townhouses his agency recently sold in the Hawthorn area were to buyers under 35, and 15 were to owner occupiers or first-home buyers.

Woodards Camberwell agent Karen Chung said quality units and apartments in Hawthorn had “good capital growth for first-home buyers who want to use it for wealth accumulation”.

Buying an apartment allowed them to live in an area they loved without spending millions.

Louise Renato and her husband Michael paid $555,000 in 2012 for their first home in Hawthorn — a three-bedroom, two-bathroom apartment at 190B Riverdale Rd they’re now looking to offload for about $1m.

“It’s small but still big enough to accommodate everything we need,” Ms Renato said.

“We still have the luxury of a really nice environment … we feel safe in Hawthorn.”

Other buyers on a budget not willing to leave their preferred neighbourhoods are turning to rentvesting to get into the property game.

Latest PropTrack research has highlighted the top 10 Victorian suburbs for first-time investors, with Melbourne’s CBD ranking No. 1, and No. 2 nationally, after a Covid-driven downturn.

PropTrack head of economic research Cameron Kusher said Melbourne CBD’s 4.37 per cent yield in the unit rental market was “high” compared to elsewhere.

“And there’s a realisation that overseas migration is coming back and there’s a shortage of rental stock in inner city areas like Carlton, St Kilda and Hawthorn,” he said of the list.

“Pakenham and Werribee have relatively low price points compared to the rest of the city. Yields are probably not as strong as you would like, but compared to what you see across Melbourne, they’re stronger.”

Mr Kusher said people were starting to move back into the inner city after a “tough run” in the CBD apartment market, with PropTrack placing the median unit price at $490,000.

Mr Vilitas said townhouses had become an “essential” part of the housing product mix, filling a demand for homes providing affordable entry option for first-home buyers and investors.

BIGGEST DIFFERENCE BETWEEN UNITS AND HOUSES

Suburb, House Price, Unit Price, Dollar Difference, Percentage Difference

TOORAK, $4,585,000, $1,020,250, $3,564,750, 349.4%

EAST MELBOURNE, $4,333,000, $851,000, $3,482,000, 409.2%

CANTERBURY, $3,372,500, $890,000, $2,482,500, 278.9%

HAWTHORN, $2,955,000, $602,500, $2,352,500, 390.5%

MALVERN, $3,100,000, $755,000, $2,345,000, 310.6%

SOUTH YARRA, $2,675,000, $666,000, $2,009,000, 301.7%

ARMADALE, $2,702,500, $708,000, $1,994,500, 281.7%

CAULFIELD NORTH, $2,703,000, $737,500, $1,965,500, 266.5%

MONT ALBERT, $2,685,500, $800,000, $1,885,500, 235.7%

GLEN IRIS, $2,550,000, $701,000, $1,849,000, 263.8%

BALWYN, $2,705,000, $887,500, $1,817,500, 204.8%

ST KILDA WEST, $2,400,000, $632,500, $1,767,500, 279.4%

IVANHOE EAST, $2,435,000, $674,000, $1,761,000, 261.3%

KEW, $2,584,400, $838,250, $1,746,150, 208.3%

ALPHINGTON, $2,583,000, $845,000, $1,738,000, 205.7%

PARKVILLE, $2,417,500, $699,000, $1,718,500, 245.9%

HAWTHORN EAST, $2,360,000, $675,000, $1,685,000, 249.6%

ALBERT PARK, $2,458,000, $817,500, $1,640,500, 200.7%

CAMBERWELL, $2,562,000, $930,000, $1,632,000, 175.5%

SANDRINGHAM, $2,497,500, $905,000, $1,592,500, 176.0%

Source: REIV

VICTORIA’S TOP SUBURBS FOR INVESTOR INQUIRY

Rank, Suburb, Property Type, Median price, Rental yield

1. Melbourne, unit, $490,000, 4.37%

2. Pakenham, house, $610,000, 3.61%

3. Werribee, house, $585,000, 3.37%

4. Southbank, unit, $569,000, 4.09%

5. Carlton, unit, $510,000, 4.58%

6. South Yarra, unit, $620,000, 3.83%

7. St Kilda, unit, $548,250, 3.89%

8. Point Cook, house, $730,000, 3.15%

9. Hawthorn, unit, $582,000, 3.74%

10. Frankston, unit, 518,500, 4.02%

Source: PropTrack, February

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