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The PRD report considers a suburb to be affordable if its median house or unit price is equal to or lower than Melbourne as a whole. Liveable suburbs must have schools, hospitals, shopping centres and parklands within five kilometres.
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Madiasmo also considered crime rates, investment indicators and the number of new homes built, which she said changed year by year.
She said while the suburbs were considered affordable when they were listed, many buyers were now unaffordable because demand was outstripping supply.
“Liveability can drive up prices because it attracts more people to live in the area, which increases demand,” Mathiasmo said.
“It becomes a real choice: Should I spend a little more for liveability … or go somewhere that’s cheaper but maybe doesn’t meet the liveability requirements?”
Ray White Eltham chief auctioneer Sean Salmon said Greensborough’s rising house prices had begun to reflect the appeal of the suburb, which has plenty of green space, schools and sporting facilities.
Homebuyers can no longer purchase homes in areas that they could previously afford.Credit: Joe Amao
Mr Salmon said while prices in some surrounding suburbs had fallen, the Greensboro market had become more competitive in recent years.
“Being the central hub of the Diamond Valley, I always felt like maybe five or six years ago, (Greensboro) was a little underpriced,” he said.
“Greensboro doesn’t seem to be slowing down at all, so I think that shows that people are seeing the value in it because it’s been growing over the last few years.”
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Mr Salmon said while buyers previously considered Greensboro a second choice because they couldn’t afford their preferred suburbs, it was now a top choice for many homeowners.
AMP chief economist Dr Shane Oliver agreed that more buyers were turning to the “bridesmaids” suburbs, causing house prices to rise in areas previously considered more affordable.
He added that many buyers were willing to sacrifice space for properties in liveable suburbs.
“Suburbs or housing types that would normally take a backseat suddenly find themselves increasing in value simply because the more desirable locations or housing are becoming less affordable,” Mr Oliver said.
“If an area is seen as a second choice but is good value, people will flock to that area and prices will start to rise, which will drive its own activity for a while but usually finds that it has gone too far in the end.”
Buxton Port Phillip director David Seeber said St Kilda had experienced such significant price growth over the past decade because its public transport, schools, parkland and proximity to the beach had made it a highly sought-after suburb over the years.
“Like any suburb, as its appeal increases, the price goes up, so not everyone can afford it,” Seeber told age.
Mr Sieber said he expected house prices in St Kilda to continue to rise, with buyers who couldn’t afford the high prices being forced to look to apartments or nearby suburbs.
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