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Home prices segregate Melbourne

Rises in house prices in the inner and middle suburbs have far outpaced those further out, leaving poorer families with fewer choices about where they live. Melbourne is becoming increasingly segregated along class lines. Rises in house prices in the inner and middle suburbs have far outpaced those further out, leaving poorer families with fewer choices about where they live.

An analysis of shifts in house prices and households over the 20 years to 2006 has found that Melbourne's real housing shortage is a shortage of affordable housing in inner and middle suburbs. The analysis, by Maryann Wulff and Margaret Reynolds for the Australian Housing and Urban Research Institute, finds that between 1986 and 2006, more poor households moved to the outer suburbs, while inner and middle suburbs became increasingly full of well-off people.

In 1986, housing prices were remarkably similar across most of Melbourne. The Bureau of Statistics divides the city into 16 suburban regions, and in 1986, median house prices in 11 of them were clustered around or just below the city's median price, between $140,000 and $163,000, in 2006 prices. The exceptions were at the top: in the arc of leafy middle suburbs from Balwyn to Beaumaris, in the inner suburbs, and in the Yarra Valley around Eltham.

But between 1986 and 2006, house prices in all these areas - except the Yarra Valley outer fringe - grew much faster than prices in the rest of Melbourne. And their social make-up changed. Housing prices in the inner suburbs grew faster than anywhere else, the median price jumping 220 per cent even in real terms (after deducting inflation).

The inner suburbs were traditionally the first home of migrants arriving in Melbourne. By 1986, gentrification had changed that, but the old and the new were evenly balanced: 38 per cent of residents were in the top two bands of household income, and 35 per cent in the bottom two.

And by 2006, even with tens of thousands of students there, only 28 per cent of inner-suburban households were on low or lower-middle incomes, while 58 per cent were on upper or upper-middle incomes.

By contrast, in outer suburban Hume (Broadmeadows/Craigieburn/Sunbury), real house prices rose only 61 per cent between 1986 and 2006, so people on lower and lower-middle incomes flocked to suburbs where they could afford to buy or rent. Their share of Hume's households jumped from 17 to 29 per cent. On the opposite side of town in Dandenong, suburbs that were middle-class in the '70s now have Melbourne's highest share of low-income residents, with 40 per cent of households on low or lower-middle incomes. The study notes that a third of the Somali refugees in Melbourne went to Dandenong.

Separate data issued by the Valuer-General shows that while 116 suburbs in September 2009 had median house prices under $400,000, 86 of them were 20, 30, 40 or more kilometres out of town. Most of those closer in were around Sunshine. Professor Wulff and Ms Reynolds urge the federal and state governments to focus particularly on increasing the supply of affordable rental housing in inner and middle suburbs. They suggest that more public housing be built there, and incentives offered for social housing in redevelopments by VicUrban and private developers.

Source: The Age Domain