Melbourne’s property market continues to demonstrate resilience, with a former milk bar in Fitzroy North selling for $5.1 million at auction—nearly $1 million above the reserve price. The sale highlights the competitive landscape for unique properties in inner-city suburbs, even as broader economic conditions, including interest rate fluctuations, remain a factor for prospective buyers. The auction results, alongside other recent sales, suggest continued demand for well-located and renovated homes in Melbourne.
The property at 558 Rae Street, Fitzroy North, underwent a significant transformation from its days as a local milk bar into a four-bedroom Victorian-era home. The renovation was undertaken by local architects Kennedy Nolan, who incorporated a landscaped central courtyard, exposed concrete, and timber details throughout the design. The home’s price guide was set between $3.9 million and $4.3 million, but bidding quickly exceeded expectations.
The auction, conducted by Nelson Alexander Fitzroy’s Mark Verrocchi, saw a “cheeky” opening bid of $3.2 million. Verrocchi initiated a vendor bid of $3.9 million, which spurred a rapid increase in offers. Bids escalated in increments of $20,000 and $50,000, quickly surpassing the $4.2 million reserve. A young family, already with familial connections in the area, secured the property. The vendors, who are relocating to Newcastle, New South Wales, plan to undertake similar renovation projects there.
The strong result at Fitzroy North was mirrored by another successful auction in Alphington, a suburb in Melbourne’s inner north-east. A two-story townhouse at 4/8 Coate Avenue, backing onto parkland, sold for $1,575,000. The three-bedroom home, part of a gated estate designed in an English mews style, had been listed with a price guide of $1,375,000 to $1.5 million. Auctioneer Michael Lang of Savills noted a slow start to bidding at $1.4 million, but the price quickly rose as two bidders competed, eventually reaching $1,575,000. The winning bidders were a couple in their 50s, narrowly beating out a younger couple seeking their first home.
The Kennedy Nolan-designed central courtyard which gives light and air to the former milk bar.Credit: Nelson Alexander
Melbourne Auction Market Shows Strength
These sales are part of a larger trend observed this week, with 1226 properties scheduled for auction across Melbourne. The results suggest a continued willingness among buyers to compete for desirable properties, despite ongoing economic uncertainties. The strength of the auction market is a key indicator of the overall health of the Melbourne real estate sector.
In Coburg, a renovated former laundromat and grocery at 105 Munro Street too exceeded expectations, fetching $1.13 million—approximately 15% above its reserve price. The three-bedroom Edwardian home, featuring Baltic pine floors and a unique study preserving the original shopfront, attracted strong interest from multiple bidders. Barry Plant agent Jarrod Couch noted the property’s history and charm contributed to its appeal.
Interest Rate Impact Remains Limited
Despite recent increases in interest rates, auctioneers like Jarrod Couch report that buyers haven’t been significantly deterred. “I think the sentiment from buyers is that they realise the recent interest rate hike is a tiny drop in the pond,” Couch said. This suggests that demand continues to outweigh concerns about borrowing costs, at least for now. The broader impact of interest rate changes on the property market will continue to be monitored closely.
The recent auctions demonstrate a diverse range of properties attracting strong buyer interest, from renovated period homes to unique conversions like the former milk bar. This suggests a broad appetite for well-presented properties in desirable locations. The competitive bidding seen in both Fitzroy North and Alphington underscores the ongoing demand in Melbourne’s inner and middle suburbs.
Looking ahead, the Melbourne property market will continue to be shaped by factors such as interest rates, economic growth, and housing supply. The next major indicator will be the auction clearance rates reported at the end of the month, providing a more comprehensive picture of market sentiment. For those considering buying or selling, staying informed about these trends is crucial.
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