Earlier in the year we speculated about the possibility of people moving away from the city (read more here and here) to embrace a different way of living and working. Something COVID did for a lot of businesses was to speed up the pace at which they were embracing digital options. This includes both for their consumers/clients and their staff enabling the great migration to begin.
As we move beyond the pandemic, Entourage’s Managing Director Damien Roylance believes businesses are only going to further embrace having their teams work more flexibly in whatever capacity best suits them. Back in May 2020 Damien floated the idea of families and professionals moving away from the CBD and out to those beautiful beaches and treescapes that are within an hour or so of Melbourne. Places like the Yarra Valley, Mornington Peninsula and the Surf Coast. And now, it seems the great migration away from the city has begun.
Get ready for the great migration frenzy
Agents operating in the Mornington Peninsula have this week described the competitive and fast paced transactions occurring right now as a “frenzy”. The real estate market opened up just two weeks ago and it’s no exaggeration to say new properties for sale are being snapped up quickly. Hamish Opray, experienced Real Estate Agent of Peninsula Sotheby’s reports that property prices are up 15-20% on pre-COVID levels and they have never been busier with new properties hitting the market and buyer demand. And these properties are getting snapped up as quickly as they can be listed, with demand far outstripping supply.
Two examples we came across recently are mid-high end properties, which typically take a little longer to sell than those in lower price ranges. 15 Driver Street, Portsea sold for $3.3M (more than $400K over reserve) after just 3 days on the market, having sold most recently 2 years ago for $1.75M. Another property at 2 Panton Road, Flinders was on the market only 8 days before it was sold for $3.8M, more than $230K over its reserve.
Contrast this with a similar property in St Kilda West being sold by a celebrity ex-couple. The property at 44 Mary Street, St Kilda West sold for $3.915M recently, which they purchased for $3.76M in 2017. After their initial buying costs (stamp duty, legal fees, etc.) they’ll have likely made a loss on this sale over the 3 years since they bought.
The point here is this: these coastal properties have sold very quickly, going well above reserve and are being purchased by families and young professionals in a market typically dominated by downsizers and older professionals. It also shows some very substantial capital growth in these sleepy towns away from the CBD where property generally doesn’t transact very often.
What’s the impetus?
With lots of families looking to move before the school year starts, buyers are going a little bit crazy in their appetite for property. Add to this that in many of these coastal suburbs you are able to get a lot more square footage for the same budget. We could be looking at some substantial capital gains for sellers as demand booms within this younger, cashed up cohort.
Will this coastal craze continue? Are these purchasers panic buying because they can’t go on holiday this year and need somewhere to escape to? Or could this be the new normal with families migrating out of Melbourne? It really goes against everything we’ve traditionally thought about the market – during a downturn the first thing to go is the Porsche and Portsea house. Instead we’re seeing people making the making the beach house their primary residence. We eagerly watch this space as it may prove to be quite an opportunity for our clients over coming years.
Are you looking at joining the great migration for a tree- or sea-change ? Get in touch, we’d love to help you find your next home down the coast.