As development sites become harder to find in the CBD, land value to the north of the city is increasing faster than anywhere in the municipality.
The City of Melbourne’s draft annual plan and budget for next financial year shows that Kensington has been the hot spot for residential property increases in the last two years, followed closely by North Melbourne and Carlton.
Land was revalued this year for the purposes of determining how much the council will slug ratepayers over the next years until the next revaluation.
The council believes the total value of property within the municipality is $41.7 billion.
Rateable net annual value (NAV) increased 10.4 per cent for Kensington residences between 2014 and 2016. In North Melbourne, the increase was 7.9 per cent, while Carlton experienced a 7.2 per cent increase in the value of residential property. In West Melbourne, the uplift was estimated at 6 per cent.
But the increase in residential property valuations were eclipsed by the increasing value of commercial property within the City of Melbourne.
Non-residential property in Docklands topped the table for higher values, increasing 13.8 per cent.
Commercial property increased in value consistently more than residential property across the municipality, except in Parkville, where it only increased 2.8 per cent compared with a 3.8 per cent uplift in the value of residential properties.
Although the Docklands example is a genuine indication of commercial property values, the uplift in North Melbourne (12.9 per cent), West Melbourne (11.4 per cent) and Carlton (10.7 per cent) are more likely based on industrial sites which purchasers hope will be re-birthed as residential towers.
Critics of tower living will, no doubt seize on the poor showing of Southbank residential properties which have been valued at only 2 per cent more in 2016 than in 2014. But this doesn’t explain a similarly poor result in Parkville where the NAV only rose 3.8 per cent.
The increase in residential property value in the CBD has been estimated at 5.4 per cent – stronger than Docklands (4.4 per cent) and East Melbourne (5.1 per cent).