In late November, a widely recognizable pumpkin appeared on the coast of Australia.
Sitting against a backdrop of rolling vineyards, the massive gourd by acclaimed Japanese artist Yayoi Kusama represented a symbol for the coastal region in Victoria, known as the Mornington Peninsula.
For starters, the artwork marked the first time that one of Kusama’s iconic polka dot pumpkins has appeared in Australia. It also served as a reminder of how much the Mornington Peninsula has transformed over the years, evolving from a retirement haven into a global hot spot of culture, art and wealth.
Located an hour’s drive from Melbourne, the Mornington Peninsula is known for its cool climate, celebrated wineries and premium golf courses. Spanning some 280 square miles, the region includes Frankston, Flinders, Mount Martha and Portsea, among other suburbs.
Now, due to its seclusion, growing cultural attractions and a tax incentive, people are increasingly establishing permanent homes in the region, driving both investment and interest in the area.
The Pandemic Effect
In 2022, the peninsula coastal village of St. Andrews Beach saw home values rise 72.8% in two years, according to data from CoreLogic. Rye, another suburb nearby, experienced a 52.6% hike, while Dromana prices grew by 50% in the same period.
As people sought to escape stringent pandemic restrictions in Melbourne, they drove up demand for real estate in Mornington Peninsula. There, rules were lax and space was generous.
While that peak in prices has since settled, demand has remained.
“The market is not as buoyant as it was three years ago, where everything was being snapped up,” says Michael Gibson, Private Property Global director. “But quality properties remain quality properties, and they’ll sell and sell very well.”
Last year, a hospitality businessman paid roughly $25 million for a mansion in Red Hill South. The deal came just a few months after a $30-million sale in nearby Sorrento, and a mega-mansion sold for $23.5 million in Flinders.
Part of the reason why the Mornington Peninsula is so attractive is due to its exclusivity. With its low housing stock and tight building codes, the options for well-heeled buyers looking for grandiose homes in the area are slim.
That’s also what makes Solitaire, a 49-acre plot of land with approved plans for a modern, oceanfront mansion, a rare opportunity for a prospective buyer.
“Getting a permit in this part of the world can literally take years,” Gibson says. “The ultimate purchaser of Solitaire has the benefit of approved drawings.” They could also choose to build something else on the site, he adds.
The listing, currently on the market for AUD 23 million or roughly US $14.8 million, is particularly desirable because it is one of the few properties in Flinders that offers direct beach access. The property also boasts two waterfalls and a natural creek that flows through the grounds and into the ocean.
Renderings, designed by BayleyWard Architecture, depict a two-story home with multiple connected structures, floor-to-ceiling glass windows and an open plan kitchen. Fletcher and Gibson currently share the listing.
Soaring Taxes Drive Permanent Residency
For some, owning a piece of property on the Peninsula has “become a bit of a Melbourne staple,” Fletcher says. Rather than going there for a weekend or at retirement, there’s been a rise in people setting up more permanent residences while perhaps maintaining a small apartment in the city.
A significant tax incentive could be contributing to the trend.
In an effort to pay down some of its COVID debt, the Australian government has implemented a series of taxes targeting owners of investment or secondary properties. The state land tax has become especially steep for owners of holiday homes on the Peninsula, where land values have grown significantly in recent years.
In certain suburbs, some owners have reported massive spikes in their land taxes, with figures soaring from $8,500 last year to $21,000 this year.
The effect of this tax has been two-fold, Gibson says.
Given that the land tax only applies to a second residence, it’s pushed many homeowners to convert their holiday homes to their permanent residences.
In other cases, it’s pushed people out of the region altogether. Amid a cost-of-living crisis, many homeowners can simply not afford the tax bill, choosing instead to sell their properties and relocate.
Trendy Lifestyle Attractions Draw Crowds
Those that have chosen to put down roots have only helped draw further investment to the area.
Before Kusama made a splash with her pumpkin, Alba Thermal Springs and Spa had people buzzing about the region. Opened in 2022, the 37-acre exclusive spa features geothermal pools, 22 spa suites and Ayurvedic-inspired beauty treatments.
The area is also heralded for award-winning wineries known for chardonnay and pinot noir, upscale farm-to-table restaurants including Ten Minutes by Tractor and luxury accommodations such as the Jackalope Hotel.
“Whether it’s the buildings or art installations, people are putting levels of effort and intent in there and it’s driving people’s desire to want to go and explore the area,” Fletcher says. “There’s energy going in that direction and that’s an attraction.”