PRD’s report considers a suburb affordable if its median house or unit price is at or below that of Melbourne overall. A liveable suburb must be within five kilometres of a school, hospital, shopping centre and green space.
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Mardiasmo also factors in crime rates, investment indicators and the number of new builds, which she said changes year-on-year.
She said while these suburbs were considered affordable at the time they made the list, many buyers were now being priced out of these areas as demand outpaced supply.
“Liveability can drive up prices because it draws more people to live in the area, and therefore increases demand,” Mardiasmo said.
“It becomes a real choice of: do I go more for the livability and pay a little bit extra … or do I go to places that are more affordable, but may not tick the liveability box?”
Ray White Eltham chief auctioneer Sean Salmon said rising house prices in Greensborough have started to reflect suburb’s desirability, which offers an abundance of green spaces, schools and sporting facilities.
Buyers are being priced out of previously affordable areas.Credit: Joe Armao
Salmon said while house prices have softened in some surrounding suburbs, the Greensborough market has become more competitive in recent years.
“Being the central hub of the Diamond Valley, I always felt that probably five, six years ago, (Greensborough) was a little bit underpriced,” he said.
“It definitely doesn’t seem that Greensborough is slowing at all, so I think that shows that people have seen its value as it’s been growing over the last few years.”
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Salmon said while buyers previously turned to Greensborough as a second choice after being priced out of their preferred suburbs, it was now the first pick for many homeowners.
AMP chief economist Dr Shane Oliver agreed that more buyers turning to “bridesmaid” suburbs had caused property prices to rise in areas previously considered more affordable.
He added that many buyers would sacrifice space to purchase a property in a liveable suburb.
“The suburbs or housing types that would have played second fiddle in normal conditions suddenly can find themselves going up in value, simply because of the more desirable locations or dwellings becoming less affordable,” Oliver said.
“If one area is seen as a second choice, but good value, people jump into that area, then prices start to go up, which then feeds its own activity for a while and can often find that it ends up going too far. ”
Buxton Port Phillip director David Seeber said St Kilda had experienced such large price growth over the last decade because its public transport, schools, green spaces and proximity to the beach made it a sought-after suburb for years.
“Like any suburb, when its desirability increases, so does the price, and therefore it’s not affordable to everyone,” Seeber told The Age.
Seeber said he expected property prices would continue rising in St Kilda, with priced-out buyers forced to turn to apartments or nearby suburbs instead.