The most sought-after Melbourne suburbs for 2016 aren’t prestige or bayside, but rather the budget and middle-price range suburbs in the north and south-east.
As housing markets in the inner east and inner south cool after a heated period of growth, home buyers chasing value are expected to continue driving activity in the middle and outer suburbs.
The working-class suburb of Noble Park is poised to be a pocket of power in the south-east with a price growth prediction of more than 6 per cent for a typical house.
Domain Group senior economist Andrew Wilson forecasts similar growth for Carnegie and Clayton in the south-east, Brunswick East in the north and Heidelberg West and Templestowe Lower in the north-east.
Ashwood, Ringwood and Mount Waverley in the outer east and Sunshine in the west are also forecast to be standouts.
Price gains in these suburbs would be above their regional forecasts, he said, with the possibility of more than double-digit growth.
“Buyers have been crowded out of some of the higher-priced inner suburbs,” he said.
“Also, there’s been such a remarkable improvement in the Melbourne economy this year, and that’s really helped lift confidence in budget markets.”
The growth prospects for the inner east and inner south next year are more modest, at 3 per cent and 4 per cent, respectively.
Melbourne’s house price is expected to rise about 5 per cent next year, outpacing Sydney’s 4 per cent prediction, the Domain State of the Market Report says.
“The extraordinary prices growth reported by Sydney, and, to a lesser degree, Melbourne, over the past year will not be matched over 2016, with those markets rapidly returning to the pack,” Dr Wilson said, forecasting growth of between 2 per cent and 4 per cent for the other capital cities.
Melbourne suburbs with house medians up to $1 million were generally expected to perform better, he said.
The ultra-prestige markets would also continue to bubble along, provided the sharemarket improved next year.
Barry Plant chief executive Mike McCarthy said big price increases in the middle to outer suburbs had started about May, and had continued strongly.
He said the average price in October and November was up about 15 per cent to 18 per cent year-on-year across the group.
“It just says to me that those middle and outer suburbs have still got some time to run,” he said.
“The ripple effect from the inner suburbs is still filtering through, where people are being pushed further out because of the affordability factor.”
Mr McCarthy added Deer Park in the west and Reservoir in the north to the list of suburbs to watch next year.
Gordon Hope, of Nelson Alexander Ivanhoe, said many buyers were coming across from the inner northern suburbs such as Preston, Thornbury and Northcote.
“It’s a bit of a flow-on effect,” he said. “I suppose people see a bit more affordability and some great options for young families as well.”
The expansion of the Austin Hospital in Heidelberg had been a big drawcard for investors, he said.
Good schooling options from preschool through to tertiary eduction, including Ivanhoe Grammar and LaTrobe University’s Bundoora campus, would also continue to draw families.
“We’re confident with our infrastructure, schools and all the amenities that we offer, I think we’re going to hold particularly well and see some good signs for the Banyule market,” Mr Hope said.
Marshall White director John Bongiorno believed price growth would be modest at best across the board in 2016.
However, A-grade properties would continue to outperform the market, he said.
This article originally appeared on domain.com.au