Melburnians love property.
For decades, buying a house has been seen not just as somewhere to live, but as one of the safest ways to build wealth.
Buy a house. Hold it. Become a millionaire. Easy.
Except the last 10 years haven’t really worked like that in Melbourne.
I’ve been saying for a while that I think many homeowners have overestimated how much their property has increased in value. So recently I decided to stop guessing and look at our own sales.
We went through every property our team sold last financial year that had also sold within the previous 10 years.
We removed anything that had been substantially renovated, extended, or rebuilt, because obviously comparing a renovated four-bedroom house with the tired two-bedroom house someone bought eight years earlier doesn’t tell us much.
That left 61 genuine repeat sales.
And the numbers were very interesting.
The median increase in value was just 7.4% in total.
Median annualised growth was approximately 1.2% per year.
And 13 of the 61 properties actually sold for less than their owners had paid.
That’s not 7.4% per year, by the way. It’s 7.4% total growth between buying and selling.
Given stamp duty and selling costs can quite easily eat up around 8%, roughly half of the properties we analysed had done little more than cover the costs of buying and eventually selling.
Not exactly the property boom our parents told us about.
Of course, there were exceptions.
If you bought particularly well, improved the property, or managed to buy during the 2019 dip and sell somewhere near the craziness of 2021, you may have done extremely well.
But most people don’t perfectly time property cycles. They buy because they need somewhere to live, and they sell because something in their life changes.
And I think that’s really the point.
We’ve probably become a little too obsessed with what our homes are worth.
For previous generations, Melbourne property delivered some extraordinary capital growth. Understandably, that’s created an expectation that buying a home should automatically make you a lot of money.
The last decade suggests we might need to reset that expectation.
That doesn’t mean buying a home hasn’t been worthwhile.
You got to live in it.
Maybe it was close to your kids’ school. Maybe it gave you a backyard when you had children. Maybe you renovated it exactly how you wanted it. Maybe you could walk to your favourite café every morning.
Hopefully you actually enjoyed living there.
That has value too.
And this certainly isn’t me saying now is a bad time to buy or upgrade. In fact, I’d probably argue the opposite.
Nobody knows what Melbourne property prices will do over the next one, three or 10 years. I certainly don’t, and I’m immediately suspicious of anyone who tells you they do.
Prices could rise strongly from here. They could do very little. They could fall.
So, if you’re waiting for the market to tell you when to move, you could be waiting a long time.
If you’re genuinely happy in your current home, great. Stay there.
But if you’ve outgrown it, want to downsize, need to be closer to a school, want a bigger backyard, a shorter commute or simply want to live somewhere better, I wouldn’t put your life on hold trying to pick the next property cycle.
Buy and sell when it makes sense for you.
And if your home happens to make you a lot of money along the way, that’s a pretty good bonus.
Feature property: 16 Attley Grove, St Kilda East
David Sciola 