PREMIUM PROPERTY

REPORT
- QUARTER 1 2019 -

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Top insights within this report
3 What happened to interest rates in 2018?
4 The federal election and potential housing policies
5 Budgetary and macroeconomic impacts on real estate
6 Evolving infrastructure and suburb livability
7 International factors at play
8 Risks to property prices in the year ahead
9 Stonnington and Boroondara
10 Port Phillip and Bayside
11 Projects and Developments
The Royal Commission into Banking had a significant impact on the
property market throughout 2018, however the recent release of the final
report held no directive for banks to further tighten their lending practices.
While previous home price declines have been triggered by
rising interest rates, this one has predominantly been caused
by the self-imposed restriction of lending due to the Royal
Commission. As it appears the impact of the final report has
already taken its toll on the market, it’s timely to review all of
the important factors at play in the premium property market.
We have compiled this Premium Property Report to assist our
clients navigate through the many complex issues currently
affecting property prices.
The majority of our clients at Marshall White have a long
term interest in property - in fact the average number of
years homes are held in our suburbs is over 11 years. Marshall
White Director, John Bongiorno says most clients sell and
buy properties in which to live so the current market offers
some excellent opportunities. “If you want to upgrade your
family home, now is the perfect time. While you might need to
accept less than you would have 12 months ago, you will also
pay less for your new home.”
Investing in property in the long term has certainly yielded
significant results in the past and taking a longer term view is
prudent. Here are a few examples from the suburbs which we
service; the median price of a home in Armadale in 2003 was
$728,750, it’s now $1,924,500. The median price of a home
in Brighton in 2003 was $875,000, it’s now $2,700,000.
In Albert Park in 2003 the median price was $665,000 and it’s
now $2,080,000. While in Hawthorn East in 2003, the price
was $615,000 and it’s now $2,028,250. You can see a full list
of suburbs and their long term median prices at the end of
this report.(1)
The broad economic outlook for Australia remains strong.
Unemployment in Victoria is lower than the national average
at 4.6%, we are experiencing population growth more than
any other state and consumer sentiment is slowly rising.(2)
A federal election in May is likely and most commentators are
picking a change of government. There will be much focus in
the coming months on the issues of negative gearing
2
and changes to Capital Gains Tax (CGT). Although many of
our clients are also property investors, it’s unlikely either of
these potential changes in policy will affect the family home.
Amidst the predominantly negative property media coverage,
2018 also saw some key highlights with many $10 million plus
sales. In 2018, 9 out of the 20 biggest real estate sales were
achieved by Marshall White. One of the directors at Marshall
White, Marcus Chiminello, who was responsible for a record
number of these sales says there have been solid results in
all Marshall White offices. “In 2018 we saw some magnificent
homes at the very top of the market find new owners and
Marshall White is proud to be leading the industry in these
$10 million plus sales,” said Marcus.
So what does 2019 hold? Professor of Economics at the
University of NSW, Richard Holden, says the important point
is that if there has been a one-off adjustment in the borrowing
capacity of Australians, then the price falls should stop fairly
soon: predictions of more modest falls in 2019 followed by
a reset and rise in 2020 mightn’t be too far off the mark.(3)
Many, including the Federal Treasurer, say lending restrictions
can now be eased and at the start of the New Year there is
already speculation that the banks will be further encouraged
to ease back on tough lending conditions. In December the
Australian Prudential Regulation Authority (APRA) decided to
lift its restriction on banks’ ability to issue interest-only loans,
so we may see the big four banks open their books again.(4)
To produce this report we asked Domain Economist, Trent
Wiltshire, to contribute his insights in addition to having
extensive independent research. We hope the content will
assist you in reflecting on the 2018 market and allow you to
prepare for the year ahead.
(1) Median prices reflect houses only by suburb, Real Estate Institute of Victoria
(REIV), sourced 11 January 2019
(2) Treasurer, ‘Victorian Unemployment Rate Falls To 4.8 Per Cent’, Premier of
Victoria, published 13 September 2018
(3) Richard Holden, ‘It’s more of a house price blip than a bust in the making’,
Property Observer, published 10 January 2019
(4) Josh Frydenberg tells banks to ease up on lending crackdown, Australian
Financial Review, published 9 November 2018
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The cash rate isn’t going up anytime soon
Actual and forecast cash rate, per cent

2.75

2.50

2.25

2.00

1.75

1.50

1.25
2015 2016 2017 2018 2019 2020

RBA cash rate Market broadcast in November 2018

Market broadcast in June 2018 Market broadcast in August 2018
Market broadcast in December 2018

Variable mortgage rates increased at the end of 2018

Discounted variable home loan rate

5.3

5.2

5.1

5.0

4.9

4.8

4.7

4.6

4.5

4.4
Jan 2015 Jul 2015 Jan 2016 Jul 2016 Jan 2017 Jul 2017 Jan 2018 Jul 2018

Owner occupier Investor

Source: Domain

What happened to interest
rates in 2018?
Trent Wiltshire - Domain Economist
The RBA sat on its hands throughout 2018, with the cash rate
remaining at 1.5%. The RBA has not moved the cash rate since
August 2016.
However, beneath this stability in the cash rate, the RBA has
had to balance an economy with divergent parts. There were
signs of an improving economy in 2018, including robust GDP
growth, the unemployment rate falling to 5% (the lowest level
since 2012), substantial government infrastructure spending
and stronger non-mining business investment intentions.
Not all went well in 2018. The trade dispute between the US
and China weighed on global confidence, the global economic
outlook weakened, inflation remained below the RBA’s 2-3%
target range, consumer spending slowed and wage growth
remained weak (although there are early signs of a pick-up).
Overall, the economy is performing a bit below what the RBA
would see as desirable, but the RBA is forecasting the economy
will improve and inflation will increase in the years ahead.
The Australian Prudential Regulation Authority’s (APRA)
“macro-prudential” measures over the 2014-2018 period slowed
speculative lending to property investors. APRA’s intervention
also cooled the Sydney and Melbourne housing markets,
which meant the RBA did not have to increase interest rates to
slow property price growth, which in turn would have slowed
economic growth and increased unemployment.
While the cash rate is the most important factor in what rate
people pay on their home loan, other factors also influence
3
home loan rates. In 2017, APRA intervened in the mortgage
market and set a speed limit on new interest-only lending
by banks. As a result, interest rates on interest-only loans
increased substantially in early 2017. Average mortgage rates
for investors and owner-occupiers increased in late 2018 due to
higher overseas interest rates pushing up bank funding costs.
However, interest rates for new borrowers have fallen a bit
over 2018 as banks sought high-quality borrowers by offering
attractive interest rates. While some home buyers were able
to take advantage of lower rates in 2018, it became more
difficult for other potential borrowers to obtain a loan in 2018
as regulators encouraged banks to scrutinise income and
expenses more closely. Banks also lent more cautiously in
response to the public spotlight on lending practices because
of the Royal Commission into the banking sector.
The financial markets are currently predicting that the RBA
won’t be moving the cash rate at any stage over the next two
years, a change from mid-2018 when there was an expectation
that the RBA would begin increasing the cash rate in mid-2019.
Indeed, there is a growing possibility that the RBA could cut
rates in 2019 or 2020, as there is a good chance the RBA’s
relatively optimistic forecasts will not eventuate. The main risks
to the outlook that may see the RBA cut interest rates include:
slow income growth, weaker-than-expected inflation and
wages growth, tighter credit conditions, increasing global trade
tensions, and further house prices falls that weigh on consumer
spending.
Reach. Relationships. Results.

The federal election and potential
effects on the property market
Election results are only certain when all votes are counted,
however most polls and betting agents are tipping a win to
Labor. However, with the election likely to be held in May, there
is a long lead time and a federal budget, which may impact the
result. While the implementation of the recommendations of
The Royal Commission will be a political battleground, there are
also key campaign issues impacting property. The two major
items on the agenda are negative gearing and capital gains
tax concessions and there will continue to be significant news
commentary regarding both.
Labor Party
To begin with the facts, the Labor Party website states:
Labor will limit negative gearing to new housing from a yet-
to-be-determined date after the next election. All investments
made before this date will not be affected by this change and
will be fully grandfathered.
This will mean that taxpayers will continue to be able to deduct
net rental losses against their wage income, providing the
losses come from newly constructed housing.
From a yet-to-be-determined date after the next election
losses from new investments in shares and existing properties
can still be used to offset investment income tax liabilities.
These losses can also continue to be carried forward to offset
the final capital gain on the investment.
Labor will halve the capital gains discount for all assets
purchased after a yet-to-be-determined date after the next
election. This will reduce the capital gains tax discount for
assets that are held longer than 12 months from the current
50% to 25%. All investments made before this date will not be
affected by this change and will be fully grandfathered.
This policy change will also not affect investments made by
superannuation funds. The CGT discount will not change for
small business assets. This will ensure that no small businesses
are worse off under these changes.
Labor will consult with industry, relevant stakeholders and state
governments on further design and implementation details
ahead of the start date for both these proposals.
The policy does not have a start date and many commentators
doubt it will pass the Senate, leaving the option for Labor to
delay the policy while the property market remains volatile.
For those Marshall White clients who predominantly purchase
property in which to live, Labor’s proposed changes to CGT will
not impact the family home and negative gearing is also not
an issue. However, the impact of these policies on the housing
market may affect housing prices and the length and severity
of the current downturn.
4
In a Goldman Sachs report titled “Fear versus Fundamentals”
reported by the Australian Financial Review in December, the
economists say Labor’s policies would only have a small effect
on investments and residential property will remain attractive.
Michael Bleby reported, “the sanguine analysis, which plays
down several popular narratives of the slowdown, makes the
argument that Australia’s housing market is in an orderly
decline and that the flow-on effects for the wider economy
will be limited.”(1)
Liberal Party
The Liberal Party website states the following on housing
policy:
We will fight Labor’s plan to punish mum and dad investors
who use negative gearing, because this supports the supply
of rental housing, placing downward pressure on rents.
Labor’s plan to abolish negative gearing will increase rents.
To help older Australians (over 65) who want to downsize,
we are now enabling them to make a non-concessional
contribution of up to $300,000 into their superannuation
fund from the proceeds of the sale of their principal home.
Providing this financial benefit for older Australians who want
to downsize will in turn help to free up housing for those who
are looking for a larger home for a family.
Providing investors in affordable housing with greater income
certainty by enabling direct deduction of welfare payments
from tenants, and increasing the capital gains tax discount to
60% for investments in affordable housing.
Our First Home Super Savers Accounts will let first home
buyers save at least 30% faster than they can currently – saving
for a deposit by salary sacrificing into their superannuation
account (over and above their compulsory superannuation
contribution).
Note: the policies noted in this article are only a snapshot of
the total housing policies for both parties and selected for their
interest to Marshall White clients.
Australian Labor Party, 2019
Liberal Party of Australia, 2019
(1) Michael Bleby, ‘Property to stay attractive despite Labor negative gearing plan:
Goldman Sachs’, Australian Financial Review, published 11 December 2018
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Unemployment five year trend
Australia’s unemployment rate inched higher to 5.1 percent in November of 2018 from a 6 and a half year low of 5 percent in the previous
two months. The economy added 37,000 jobs while the number of unemployed increased 12,500.

6.6

6.4

6.2

6.0

5.8

5.6

5.4

5.2

5.0

4.8
2014 2015 2016 2017 2018

Inflation five year trend

Australia’s consumer price inflation eased to 1.9 percent year-on-year in the third quarter of 2018 from 2.1 percent in the previous period.
The latest figure was in line with market expectations, mainly due to a marked slowdown in cost of housing.

3.5

3.0

2.5

2.0

1.5

1.0

0.5
2014 2016 2018

Source: Trade Economists, Australian Bureau of Statistics


Budgetary and macroeconomic
impacts on real estate
The Australian economy is performing well. The RBA predicts
GDP to grow by 3.5% for the next two years, we have low and
stable inflation, low unemployment growth and a low cash
deficit. December’s Mid Year Economic Forecast Outlook saw
the economy on track to be $15 billion better off over the
next four years than previously forecast, largely due to strong
corporate profits and employment growth. The economy
appears to be in its best shape since the 2008 global financial
crisis(1) and is performing better than the OECD average.
So what does this mean for housing and how can these factors
influence the real estate market?
Tax cuts
Many commentators are expecting pre-election tax cuts in line
with the many announcements in the 2018 budget concerning
tax bracket changes. These tax cuts may help to balance
out the reduction in household spending and negative wealth
effects of a declining property market. This could lead to
greater confidence in all forms of spending including housing.
Shane Oliver, Chief Economist at AMP Capital says the
improved budget outlook provides some scope for the
government to announce somewhat bigger and earlier income
tax cuts than already legislated following the budget and other
pre-election advantages ahead of next May’s election.(2)
Unemployment
Unemployment is low at 5% with the RBA tipping a further
reduction in unemployment this year coupled with a gradual lift
in wages. In order to be in the market to buy a house you need
to have a job, so the more people are employed, the more who
are able to purchase property.
Tim Lawless of CoreLogic says there are positive signals
in employment pointing to the likelihood that this price
correction may not be all that different to those seen in the
past. “Population growth remains strong and maintaining
a consistent migration policy seems to have support from both
sides of politics which will continue to support demand for
housing… [and] labour markets are reasonably healthy with
unemployment holding at 5.3% and likely
to trend lower.”(3)
Housing affordability
While in previous years the housing affordability issue was
addressed in the federal budget, 2018 saw no new measures as
the government predicted the market would soften on its own
accord. It was correct.
5
Domain states that house prices in the country’s hottest markets
stabilised just in time to let the government off the hook for
this year’s (2018) budget.(4) Although with a potential change in
government, housing affordability will again be a key issue with
the ALP offering a number of policies including a scheme to
offer investors in new property a $8,500 per annum subsidy in
return for offering a 20% discount to tenants.
Inflation low and stable
Low inflation places less pressure on the RBA to increase
interest rates. As we have seen in recent years, inflation has less
influence over property than previously thought, and we have
experienced an extended period of low inflation and growing
house prices. However, a gradual increase in inflation could
increase rates.
The OECD recommended if the upswing in economic
activity continues and inflation is projected to rise
gradually, then authorities should gradually remove
monetary accommodation through a policy rate increase.(6)
Infrastructure
Victoria will receive a record level of $17.3 billion in GST
revenue from the federal government mainly due to higher
than expected population growth.(5) We will also receive $7.6
billion in federal funding for projects such as the Airport rail link
(although this won’t start until 2026) and the North East link.
New infrastructure is always good for property prices and a
suburb’s livability.
The Sydney Morning Herald commented Victoria’s funding
represents a third of Mr Morrison’s updated infrastructure spend
in the 2018 budget, and comes after a startlingly parsimonious
allocation of less than 10% (over five years) in 2017. So, having
the federal government partner with the state government to
pump money into roads and public transport is good news, and
should pay handsome economic and social dividends – on the
condition that projects are selected on merit and need, and are
managed with transparency and accountability.(6)
(1) Key economic indicators snapshot, Reserve Bank of Australia, published 5
December 2018
(2) Stephen Letts, ‘Australia’s economic growth slows rapidly to 2.8pc’, ABC News,
published 5 December 2018
(3) Tim Lawless, ‘From Boom To Doom...But Is It Really That Bad?’ CoreLogic,
published 21 September 2018
(4) Ingrid Fuary-Wagner, ‘Federal Budget 2018: No pill for housing pain as
government uses house prices as get out of jail free card’, Domain, published 8 May
2018
(5) Peter Martin, ‘GST surprise puts Victoria a billion dollars ahead’, The Age,
published 5 April 2018
(6) Michael Heath, ‘Be prepared for a housing market price dive, OECD warns’,
Sydney Morning Herald, published 10 December 2018‘
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Victoria’s future growth
Planning for a Victorian population of over 10 million, population growth will increase demand for services such as health, education and transport.
In 2051, the population will also be older with the number of people aged 65 years and over expected to almost triple, from 800,000 in 2011 to
almost 2.2 million.

1.8 million
0.5 million 0.5 million 1.7 million 22.5%
25.3% 23% 20.5%
10.1 Million
Projected Victorian 8.0 million
2.1 million Population
Victoria’s Metropolitan
in 2051 Melbourne 2051
regions 2051
4.6 million
57%
1.1 million
51.7%

1 million
24.3%
0.4 million 0.5 million
25.9% 0.3 million 13%
17.3% 4.2 million
Metropolitan
1.4 million Melbourne 2011
Victoria’s Age Groups
regions 2011 0-19 years
20-64 years
0.8 million 2.6 million
65+ years
56.8% 62.7%

Source: Victorian Infrastructure Plan

Melbourne’s projected population

Melbourne’s been bigger before and at this rate it will, sometime in September 2048, eclipse Sydney as Australia’s most-populous city.

10,000,000

9,000,000

8,000,000

7,000,000

6,000,000

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

1901 1911 1926 1936 1946 1956 1966 1976 1986 1996 2006 2016 2026 2036 2046 2056 2066

Melbourne Sydney

Source: Australian Bureau of Statistics, SMH


Evolving infrastructure
and suburb livability
Melbourne is one of the fastest growing cities in the developed
world and one of the major factors affecting house prices in
the medium to long-term is infrastructure. Suburbs that gain
infrastructure funding such as new roads, public transport,
schools and healthcare will have significant advantages
over those that are left behind. For example, buyers will be
less attracted to areas that have traffic concerns and more
attracted to suburbs which are close to multiple school options
and hospitals. Similarly, the delivery of new train or light rail
services can increase higher density housing which potentially
raises the value of standalone housing.
So what is in-store for Melbourne, and specifically the suburbs
serviced by Marshall White in the coming months and years?
Transport
The return of the Andrews government has confirmed
transport projects such as the $63 million streamlining of
Hoddle Street and the upgrading of Swan Street, Brunton
Avenue, Johnson Street and the Eastern Freeway. The Caulfield
to Dandenong level crossing removal project will see the $1.6
billion “skyrail” project will add 22.5 hectares of new linear park.
The $11 billion Metro Tunnel project is currently under
construction with the Eastern entrance to be located at Siding
Reserve. South Yarra station will also be given a $12 million
upgrade. There will be five new underground stations at Arden
(North Melbourne), Parkville, CBD North (State Library), CBD
South (Town Hall) and Domain (Anzac). The tunnel and other
network improvements will provide 48% more peak capacity
on the Sandringham line and 45% more peak capacity for the
Cranbourne/Pakenham lines.
Victoria may also receive more funding for infrastructure
projects via the recently signed Memorandum of
Understanding with China, under China’s Belt and Road
Initiative. This initiative aims to lend funding to governments to
improve infrastructure and Victoria is the first state government
to sign the understanding.
Schools
Victoria’s Catholic and private schools are set to receive
an extra $1.49 billion over the next decade from the federal
government’s surplus, more than any other state.(1) The funds
will be paid directly to Catholic and independent schools and
spent as they see fit.
6
While we are blessed with some of Melbourne’s finest private
schools, there are also upgrades for public schools which are
always beneficial for local desirability (take Balwyn High School
as an example). Plans include:
»» Bentleigh West Primary School upgrade
»» East Bentleigh Primary School upgrade
»» Ormond Primary School upgrade
»» Sandringham East Primary School upgrade
»» McKinnon Secondary College additional campus works
»» Abbotsford Primary School upgrade
»» Albert Park Primary School upgrade
»» Elwood College upgrade
»» Richmond Primary School upgrade
»» Richmond West Primary School upgrade
»»
»»
Spensley Street Primary School upgrade
St Kilda Primary School upgrade
Suburbs
State government planning also significantly affects housing
prices and the longer term livability of suburbs. The largest
development on the Victorian horizon is Fisherman’s Bend
with the government releasing details of the 480 hectare
project late last year. For residents in the neighboring suburbs
of Port Melbourne and South Melbourne, height restrictions of
four storeys were announced. In other parts of the project 30
storeys are planned and developers will be allowed to increase
density if they make a 6% allowance for affordable housing. The
new suburb also aims to increase use of public transport with
only one car space provided for every two homes.
Prahran locals will look forward to the Cato Street development
which is due for completion later this year. The Stonnington
Council is transforming the existing Cato Street car park into a
public space which is good news for residents as Stonnington
currently has the second-lowest amount of open space per
capita in Victoria.
Coupled with the upgrade of the Chandler Highway Bridge
which connects Kew to the Northern suburbs, the new Yarra
Bend Development will see 2,500 new homes across a mix of
house and land, apartments, townhouses and lofts. The old
Amcor Papermill site was acquired by Glenvill in 2012 and the
16.5 hectare “mini-suburb” will be completed over the coming
five years.
(1) Catholic and independent schools given extra $4.6bn in funding peace deal, The
Guardian, published 20 September 2018
Victorian Infrastructure Plan, June 2018
Reach. Relationships. Results.
 7

International factors at play

How much of an impact does the global economy have on house prices? The International Monetary fund released a report in late
2018 stating Australian house prices have increasingly become determined at the global level. The Biannual Global Financial Stability
Report said local factors, such as land use regulations, tax policy and demographics, still account for most of the variation in house
prices, but during the past three decades house prices have become increasingly synchronised across countries, especially among
major cities.(1)

Chinese property buyers The US economy

The changes to foreign property investment rules introduced
in 2016 reduced demand for housing from foreign investors,
especially from China. The Foreign Investment Review Board
(FIRB) reported in 2015/16 there were 40,149 foreign residential
real estate approvals and a year later the number was down
to 13,198. In addition, the Chinese government last year
tightened its foreign exchange rules requiring foreign currency
exchanges to be used for genuine consumption needs, not
for pure investment. These two factors combined could mean
an ongoing decline in the number of Chinese buyers in the
Australian property market, potentially impacting house prices.
The Chinese economy
Australia is one of the most China dependant economies in
the world with 24% of our total trade being with China, rising
by 16% in 2017 to $183 billion and figures released for 2018
were $194.6 billion. Much of these exports are from mining and
commodities, but $11 billion was from tourism and $9 billion
was from education. Therefore a downturn is the Chinese
economy is bad news and the latest December figures show
China’s exports were down 4.4% and imports down 7.6%, the
biggest monthly fall in two years.(2)
The USA is still the world’s largest economy so any downturn in
America creates ripples around the world. While it’s impossible
to guess what will happen next in the US, the one clear
Trump factor for the Australian economy is his ongoing trade
tensions with China. This is particularly difficult for Australia
given China is a key trading partner and the US is a key ally.
Some commentators claim the tensions are already having an
impact on markets and point to both the US and Australian
sharemarket’s poor performance in the last quarter of 2018.(3)
Immigration
A document prepared by the NSW Treasury and obtained by
the Australian Financial Review showed lower migration levels
would lead to lower house prices nationally.(4) Depending on
the outcome of the election, we may have immigration levels
cut and the modelling in the report indicates this would not be
positive for housing. In the lead up to the federal election, we
can expect plenty of noise from politicians on this issue with
Labor citing immigration cuts as potentially reducing house
prices and Liberal citing changes to negative gearing and CGT.
(1) Global Financial Stability Report, The International Monetary Fund, 2018
(2) David Chau, ‘Australia’s fortunes are linked to China’s economy — for better or
worse’, ABC News, published 15 January 2019

(3) David Chau, ‘Australian share market loses $41 billion as market drops to two-
year low’, ABC News, published 10 December 2018

(4) John Kehoe, ‘Lower migration will reduce house prices, NSW warned’, Australian
Financial Review, published 26 November 2018

Foreign investment approvals

Australia’s Foreign Investment Review Board (FIRB) reported in 2018 that foreign residential real estate approvals dropped significantly in the 2016-17 period from previous years
during the foreign property investment boom. 2015-16 saw 40,149 approvals granted, totalling A$72.4 billion, the figure for the following year was just 13,198 approvals, totalling
A$25.2 billion.

45,000

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0
07

7
/1

/1
/1

/1

/1
/0

/1
/1
1
9/

10
6/

8/

16
14
11

12

15
13
07

20
0

20
0

20

20
0

20
20
20
20
20
20

20

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Risks to property
prices in the year ahead
Trent Wiltshire - Domain Economist
2019 looks likely to be a year of greater stability for Australia’s
property market after a tumultuous 2018. We predict that
prices will continue falling in 2019, but that the pace of those
falls will slow mid-year before we move into a phase of modest
growth.
We predict that Sydney and Melbourne will be two of the
weakest markets in this year. Brisbane, Perth, Adelaide and
Canberra should see modest house price growth in 2019 and
Hobart house prices should stabilise after rapid growth in
recent years.
We expect the falls experienced by Sydney and Melbourne over
the 2017-2019 period will prove to be the largest since the late
1980s. But it’s worth remembering these falls have come on the
back of an extraordinary period of rapid growth.
These predictions of a modest turnaround in 2019 are based
on projected strong population growth, the RBA not changing
the cash rate in 2019, lower unemployment, faster wage growth
and increasing first-home buyer activity. Investor caution and
tighter bank lending practices have weighed on prices, however
we think that banks and potential borrowers should begin to
adjust to new lending standards in 2019, with lending growth
to resume at a more moderate pace.
There are a number of downside risks to property price growth
picking up over the year ahead. First, there is the possibility
that mortgage rates could increase earlier due to banks
passing on higher funding costs as global interest rates rise.
There is also the possibility that the RBA increases the cash
rate earlier than market expectations, as senior officials have
signaled that the next cash rate move is more likely to be up
than down. Second, the banking Royal Commission’s findings

Historical median property prices

A longer term outlook on the median house price performance in Marshall White’s areas of Stonnington, Boroondara, Port Phillip and Bayside.
Source: REIV

Total Properties Sold (Combined Municipalities)

Median
property
price

Stonnington

Boroondara

Port Phillip

Bayside

Year
 8

could result in banks further tightening lending criteria. This
has the potential to slow lending for new home loans further,
which would weigh on property prices. Other events that could
push property prices lower are slower population growth,
forced selling by investors switching from interest-only loans
to principal and interest loans and a slowdown in the Chinese
economy.
On the other hand, some outcomes could see property
prices grow at a faster pace. First, some approved housing
construction projects may be abandoned or delayed if
investors struggle to obtain finance or sell enough apartments
prior to construction. If these delays and abandonments
occur in significant enough numbers, and as a result the
construction pipeline is lower than expected, this could push
prices up. Second, if price declines continue, governments may
introduce policies such as first-home buyer grants, stamp-duty
concessions, or a reduction in taxes and charges on foreign
investors, to support prices. Third, if the RBA’s optimistic
economic forecasts eventuate, the negative sentiment that is
contributing to falling property prices may turn around faster
than expected.
The impact of the Labor Party’s proposed changes to negative
gearing is more uncertain. The reform will likely push prices
lower eventually, however, may actually support prices in the
next 6-18 months.
One thing for sure is that owners, investors and would-be
buyers will all be watching the market closely in 2019 for
signs of a turnaround.

18,000

16,000

14,000

12,000

10,000 Total properties sold

(combined areas)

8,000

6,000

4,000

2,000

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Stonnington
The Marshall White Stonnington office had a successful year ranking number one in sales for all properties above $1 million. In
total, the office sold 369 properties in 2018 and with a relatively even spread of sales across all suburbs. Suburbs which sold a high
number of properties over $3 million include Toorak, Malvern and Malvern East, with Marshall White achieving 59 of these sales. The
median prices for all properties in Stonnington for 2018 was $1,899,500, an increase of 31% from five years ago when the median was
$1,450,000.

Highlight Sales

140 Kooyong Road, Toorak 9-11 Ashley Grove, Malvern

This contemporary Toorak home sold for $13,190,000 (having
previously sold for $9,980,000 in 2015). Unique in its striking
architecture and with over 1200sqm of land, the owners were
downsizing to an apartment. The successful purchasers were
a growing family seeking a comprehensively appointed home.
Having over 250 inspections, the campaign demonstrated that
great properties always attract premium prices irrespective of
market conditions.
Located in a coveted pocket on a substantial 1,651sqm (approx.),
the rarity of this home with a 30m street frontage provided
an abundance of opportunity to leave as is, renovate, extend
or rebuild. With an excellent presence across print and digital,
Ashley Grove was well-marketed, received generous press
coverage and resulted in an exceptional result selling for
$7,100,000 at $800,000 above reserve with 36 bids.

Median Prices by Suburb

Industry statistics for median house prices in Stonnington between 2003-2018

Suburb 2003 2008 2013 2018

Armadale $728,750 $1,340,000 $1,651,000 $1,924,500

Glen Iris $645,000 $1,000,000 $1,300,000 $1,910,000

Kooyong $1,200,000 $1,084,250 $1,135,000 $1,827,500

Malvern $762,000 $1,400,000 $1,470,000 $2,610,000

Malvern East $621,000 $930,000 $1,160,000 $1,773,750

Prahran $522,500 $800,000 $868,000 $1,540,000

South Yarra $664,000 $912,000 $1,023,000 $1,627,500

Toorak $1,550,000 $2,750,000 $2,850,000 $3,800,000

Windsor $484,300 $750,000 $801,000 $1,400,000

Source: Property Data Business Analyst, median house prices by suburb for indicated calendar year
 9

Boroondara
The Boroondara office of Marshall White sold 456 properties and sold more premium homes over $2 million than any other agency.
The median price for Boroondara sits at $1,900,000 which is up 27% from five years ago when the median price was $1,500,000.
Suburbs well above the area median in 2018 included Deepdene at $2,700,000, Balwyn at $2,393,500 and Canterbury at $2,390,000.
The suburbs that are primarily accountable for properties sold at $3 million and above include Hawthorn, Hawthorn East, Kew,
Balwyn and Balwyn North.

Highlight Sales

239 Union Road, Surrey Hills 34 Edgevale Road, Kew

With lush surrounding gardens on 753sqm approx., this stunning
single-level Californian family home was meticulously renovated
and extended, transforming it into a sublime entertaining
domain. Comprising 4 bedrooms, the successful purchasers
were a young family and they and participated in a very
competitive auction being 1 of 5 bidders.
Located in the private school belt, this 4 bedroom timber
Edwardian had been recently renovated yet still retained scope
to enhance and make a family’s own. With 80 prospective buyer
inspections, the vendors’ expectations were realistic and set
the scene for a competitive auction with 5 bidders on the day
resulting in a sale price of $2,260,000. The successful young
family had recently sold with Marshall White in the same area
and were upsizing from a single fronted home.

Median Prices by Suburb

Industry statistics for median house prices in Boroondara between 2003-2018

Suburb 2003 2008 2013 2018

Ashburton $528,000 $780,000 $985,000 $1,650,000
Balwyn $668,500 $1,185,000 $1,505,500 $2,393,500
Balwyn North $570,000 $900,000 $1,237,500 $1,760,000
Burwood $417,500 $655,000 $770,000 $1,320,000
Camberwell $685,500 $1,020,000 $1,381,500 $2,100,000
Canterbury $920,000 $1,453,000 $1,915,000 $2,390,000
Deepdene $792,500 $1,255,000 $1,975,000 $2,700,000
Glen Iris $645,000 $1,000,000 $1,300,000 $1,910,000
Hawthorn $675,000 $1,290,000 $1,445,000 $1,922,000
Hawthorn East $615,150 $954,100 $1,085,000 $2,028,250
Kew $750,000 $1,260,000 $1,751,000 $2,116,944
Kew East $570,500 $877,500 $1,255,000 $1,787,500
Mont Albert $612,000 $1,010,000 $1,290,000 $2,020,000
Surrey Hills $600,000 $925,000 $1,302,500 $1,900,000

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Port Phillip
Marshall White retained the number one agency ranking for houses sold above $1 million in Port Phillip during 2018 selling over double
the amount of properties than our nearest competitor. While median prices for all houses sold in the Port Phillip area reduced slightly
from $1,769,000 to $1,740,000, there were some notable exceptions for median prices by suburb including Middle Park at $2,685,000,
Albert Park at $2,080,000 and Elwood at $2,057,500. Looking at the longer term trend for Port Phillip, the median price in 2014 was
$1,114,000 which represents an increase of 52% to 2018, surpassing our other office areas in terms of accumulated growth.

Highlight Sales

382 Ross Street, Port Melbourne 13 Ward Street, South Melbourne

Completed only 2 years ago, this modern town residence across
3 levels featured an exceptional floor plan and outstanding
build. Providing city edge living with 3 bedrooms and a fabulous
private outdoor entertaining precinct, the successful buyers
were seeking a Melbourne base. A total of 83 prospective buyers
inspected the property and 5 bidders competed on Auction day
to secure Ross Street at $75,000 above reserve.
Located in one of South Melbourne’s best pockets. Initially
quoting a buyer guide of $1,650,000 - $1,750,000, this was
increased to $1,700,000 - $1,800,000 following a high level
of interest. Following the price adjustment, exceptional buyer
communication was vital. The home was professionally styled
and was in need of some work which presented a great value
opportunity to the market and 5 repeat inspections ensued.
The successful buyers were a family from Williamstown that had
inspected a number of Marshall White homes.

Median Prices by Suburb

Industry statistics for median house prices in Port Phillip between 2003-2018

Suburb 2003 2008 2013 2018

Albert Park $665,000 $1,110,000 $1,360,000 $2,080,000

Elwood $665,000 $1,036,500 $1,271,000 $2,057,500

Middle Park $818,750 $1,430,000 $1,610,000 $2,685,000

Port Melbourne $570,000 $775,000 $950,000 $1,470,000

St Kilda $500,000 $810,000 $615,000 $1,602,000

St Kilda East $490,000 $837,500 $1,085,000 $1,485,000

St Kilda West $940,000 $1,340,000 $1,300,000 $1,675,000

Source: Property Data Business Analyst, median house prices by suburb for indicated calendar year
 10

Bayside
In 2018, our Marshall White Bayside office achieved the highest number of sales for properties over $3 million in the market. Suburbs in the
Bayside area enjoyed average price increases of 3% in 2018, which defied the overall market downturn. The median prices for all properties
sold in Bayside was $1,733,000, a significant increase of 49% from five years ago when the median was $1,160,000. The hot suburb in the over
$3 million market was Brighton where 108 of the 155 total market sales were achieved at this level. Sales for homes between $2-3 million were
also dominated by Brighton and Brighton East with other notable suburbs being Beaumaris, Black Rock, Hampton and Sandringham.

Highlight Sales

8 Hector Street, Brighton 17 Avelin Street, Hampton

This environmentally sustainable home included an electric
Nissan Leaf car in the sale. In just over 2 weeks, 35 prospective
buyers inspected the home and it sold prior to auction for
$2,820,000 following international (vendor) and interstate
(purchaser) negotiations. The buyers were a family from Perth
who had been looking for some time and had finally found the
right home.
A beautifully restored and warm Californian Bungalow, Avelin
Street is essentially the iconic Hampton property situated within
the desirable Castlefield Estate. The property had been occupied
for over 30 years by a family who had raised their 3 children in
the home. Moving on to the next generation, a young couple
upsizing from Brighton with 2 children purchased the home for
$2,475,000.

Median Prices by Suburb

Industry statistics for median house prices in Bayside between 2003-2018

Suburb 2003 2008 2013 2018

Beaumaris $662,000 $930,000 $1,042,500 $1,660,000

Black Rock $745,000 $1,090,000 $1,215,000 $2,095,500

Brighton $875,000 $1,600,000 $1,710,000 $2,700,000

Brighton East $640,750 $980,000 $1,225,000 $1,935,000

Cheltenham $390,000 $550,000 $645,000 $1,035,000

Elsternwick $695,000 $875,000 $1,345,000 $1,925,000

Hampton $654,250 $1,100,000 $1,238,500 $1,900,000

Hampton East $408,000 $635,000 $745,000 $1,257,500

Highett $400,000 $600,000 $730,000 $1,301,000

Sandringham $665,000 $1,045,000 $1,100,000 $1,810,000

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Projects and Developments
Throughout 2018 Marshall White Projects continued to dominate in and around our residential offices of Stonnington, Boroondara,
Port Phillip and Bayside, whilst expanding into suburbs along growth corridors where townhouses or ‘house and land’ packages
continue to be increasingly popular. An exciting extension of the Marshall White Projects brand is Marshall White Living, created to
service such developments as ‘The Grace’, a collaboration with Australian Unity and their landmark building catering to the over 55’s
retirement living requirements.

Highlight Developments

42 Nelson Street, Ringwood 185 Rosslyn Street, West Melbourne

Marketed throughout 2018, in three buildings, Eden Square,
Valley Square and Garden Square totalling 197 apartments
and townhouses ‘Nelson’ proved that location will always
drive demand. With an average sale price of $625,000, the
CHT Architect designed floor plates still allowed purchasers
to combine and create luxury apartments at over $2 million.
With builder Hamilton Marino anticipating delivery prior to
March this year, it will create a benchmark by which all other
developments in and around Ringwood are judged.
Marketed throughout 2018, in five buildings, the Foundry,
the Adderley, the Mailhouse, the Spencer and Adina, totalling
389 apartments, ‘West End’ creates a city within a city, with
unparalleled common facilities that provides everything a
purchaser needs without having to leave the confines of your
home. With demolition underway (a large undertaking for
over a hectare of land) and the financier agreeing on a builder,
West End will soon rise and take it’s rightful place as the best
development outside the CBD.

2017-2018 Comparison
2017 2018 Per Cent Difference

Average off the plan sale price $909,560 $980,533 7.8%

Sales up to $750,000 (of total) 52% 40% -23%

Sales betweem $750,000 -

31% 35% 13%
$1,250,000 (of total)

Sales over $1,250,000 (of total) 17% 25% 47%

Buyer appointments 2,333 2,248 -3.6%

All information in this report has been obtained from sources believed to be reliable and is to be used as a guide to the performance and outlook for the real estate market
in Marshall White’s areas of operation. Any recommendations and forward looking statements are opinion and do not intend to predict future performance of suburbs,
areas or properties. Prior to relying on the information in this report you should obtain independent professional advice and consider your personal circumstances.

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