Melbourne’s next boom suburbs revealed, including Balaclava, Watsonia

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46 Brunning St recently fetched $1.35 million in future boom suburb Balaclava.

Househunters take note — Melbourne’s next boom suburbs have been revealed.

Balaclava is shaping up the strongest, with Select Residential Property Research Group predicting its median house price will soar 20 per cent, or about $215,000, to hit $1,286,434 by 2022.

Rises of 18 per cent are also forecast for South Melbourne, Watsonia and Carlton over that period, which would take their medians to $1,426,495, $848,718 and $1,391,213 respectively.

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87A Elder St, Watsonia sold for $655,000 last month.

Flemington, Gladstone Park, Hawthorn, Coburg North, St Kilda East and Collingwood are all expected to see 17 per cent growth.

SRP director of research Jeremy Sheppard said his group analysed 20 metrics reflecting supply and demand levels in Melbourne’s suburbs to form the list.

These included auction clearance rates, vacancy rates, the average number of days properties spent on the market, online search interest, rental yields, and where suburbs sat on the “market cycle”.

Mr Sheppard said Melbourne’s future boom spots included affordable areas (Watsonia, Gladstone Park and Coburg North) that were “still playing out their growth cycles”.

There were also “exclusive suburbs” that had become “more affordable and appealing” after baring the brunt of the downturn.

Collingwood — where 137 Hotham St achieved $855,000 this month — is also on the rise, according to SRP.

The latest data from another research firm, CoreLogic, shows Balaclava’s median house price shed 21.1 per cent in the year to April 30 to hit $1.085 million. But over five years, the inner-south suburb has risen 25.1 per cent.

Hawthorn, South Melbourne, St Kilda East and Carlton also dropped more than 20 per cent in the year to April.

McGrath St Kilda principal Josh Stirling said while Balaclava and St Kilda East “weren’t destinations” for buyers a decade ago, they’d become popular due to drawcards including Balaclava station, St Kilda Primary School and the reinvigorated Carlisle St.

“Carlisle St used to have $2 dollar shops and European delis, now it’s trendy cafes and barber shops,” he said.

354 Inkerman St, St Kilda East sold for $1.17 million amid strong buyer competition this month.

Mr Stirling said buyers were starting to turn up in droves, buoyed by falling prices, the federal election result and back-to-back interest rate cuts.

But the market correction had made many homeowners reluctant to sell, resulting in a crippling lack of available stock.

“I don’t think I’ve ever seen volumes so tight,” he said.

“But buyers feel the market’s bottoming out and they’re worried it’s going to take off again.”

Mr Sheppard said he didn’t expect the entire Melbourne market to boom over the next three years, but instead experience single-digit house price growth per year, at best.

ANZ has tipped a modest 2.1 per cent decline for the city’s house prices this year and a 4.3 per cent rise next year, while NAB forecast a 5.5 per cent drop for 2019 and no change to prices in 2020.

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MELBOURNE’S NEXT BOOM SUBURBS

Select Residential Property Research Group predicts that by 2022, the median house prices in these suburbs will have risen by:

20%: Balaclava to $1.29m

18%: South Melbourne to $1.43m / Watsonia North to $848,718 / Carlton to $1.39m

17%: Flemington to $1.09m / Gladstone Park to $717,668 / Hawthorn to $2.09m / Coburg North to $876,076 / St Kilda East to $1.48m / Collingwood to $1.07m

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