The Caffeine Charge

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    The Secret Agent Report - The Caffeine Charge

    September 2013

    The Caffeine Charge

    In Part 1 of our Lifestyle Report we looked at the influence of walkability on house prices and a suburbs desirability. In Part 2 we take a closer look into two factors that have become a predominant feature of Melbourne’s culture – food and coffee.

    In particular we will consider these two questions:

    • How do lifestyle considerations drive people’s choices on where to live?
    • Do highly-rated coffee establishments have any effect on surrounding property prices?

    The factors important for a great lifestyle suburb obviously depend on the individual who lives there. However, for the purpose of this report we will define a great lifestyle as living close to good cafes, restaurants and transport options.



    Coffee Shop Density Map


    The demand for coffee in Melbourne is high enough for the appearance of new cafes on a weekly basis.

    In order to take a closer look at the distribution and density of cafes in Melbourne, we aggregated data from Beanhunter, a popular coffee review website, and utilised the Google Maps API. This analysis included over 1300 rated cafes in Greater Metropolitan Melbourne.

    Caffeine Charge

    It was no surprise that Melbourne CBD ranked the highest with 192 coffee establishments. Richmond(39), Fitzroy(38), Hawthorn(38) and Brunswick(34) also ranked highly. The suburbs forming the top 10 were all inner-city suburbs with the exception of Brighton.

    In the last report we noted that for a suburb to be walkable, a high density of both people and businesses are necessary. It is likely that these suburbs, with a high density of cafes, would also score high on the walkability scale. Comparing these results with those in our last report on walkability, this appears to be the case. Melbourne, Fitzroy, Collingwood, St.Kilda, South Melbourne, South Yarra and Carlton all scored in the top 10 for both density of coffee establishments and walkability.


    A higher density of cafes does not necessarily equate to better quality establishments. Most of the new cafes built in Melbourne are reaching a new standard of quality set by the likes of St. Ali and Seven Seeds. These ‘fine dining’ cafes are so popular on weekends that you can find yourself waiting in line for a table.

    You may be wondering how all of this relates to property prices. Does the number of good quality cafes in your suburb add value to your house? This question is difficult to answer directly as there are many other confounders that will affect sale prices. Thus to do this we decided to take an observational approach.


    It is reasonable to assume that the presence and quality of shops in a neighbourhood can have a strong effect on the sale price of nearby properties.

    Consider Gertrude Street in Fitzroy. Up until the year 1990, Gertrude Street was regarded as “rough patch”. Characterised by drugs and crime, it was a cheap area for immigrants and artists to live and still be close to the city.

    The street’s potential began to be realized from this time and gradually a transformation has taken place. Now, almost a quarter of a century later, Gertrude Street is one of the trendiest places to be seen in Melbourne.

    Through the area’s gentrification – the cafes, restaurants, galleries and boutiques along here have brought the area to life and created a desirable atmosphere to be in. Property prices have increased dramatically over this growth period.

    For example, a one bedroom apartment on Gertrude Street sold in 1996 for only $175,000. What a great buy this was. The owners sold this same apartment in 2012 for $669,500. A two bedroom apartment sold for $750,000 in 2007, and was resold two years later for $1,011,500.

    This was around the same time when Gertrude Street became known as a destination for great food and coffee.
    This price increase is consistent with the results of our previous report on lifestyle where it was found that there is a price premium for walkability. As the number of shops increased along Gertrude Street, the walkability of the houses in the area increased as did the price of property. This is the perfect example which gives more evidence that lifestyle is fast becoming the new prestige.

    North Melbourne, by no means undiscovered, appears to be showing signs of a Gertrude St situation, in that it is becoming more and more gentrified each year. Walk past Auction Rooms on a weekend and there will be a crowd out the front waiting for a table.  At night, Errol and Victoria Street restaurants are buzzing. With more and more young professionals and families moving in, the area is growing as are it’s property prices. A four bedroom house on Errol Street sold in 1996 for just $318,000. It resold this year for $1,175,000.

    It will be interesting to see if this story repeats itself in suburbs such as Footscray which has been populated mostly by migrants for the last few decades and has seen flickers of change on and off. It’s neighbouring western suburbs of Seddon and Yarraville have already undergone gentrification and it seems Footscray is going to be next. It is one of the few inner city suburbs left that is still affordable. It already has an in depth array of food choices. All it needs is the “community assets and population that make a suburb hip.” (Matheson, 2012)

    From the opposite perspective, it could be argued that the better cafes are established in suburbs that already contain expensive houses. That may be the case today with plenty of business owners wanting to set up shop in the increasingly pricier suburbs such as Fitzroy, Collingwood and Brunswick. However, when you look at suburbs such as Toorak and East Melbourne this does not seem to be the case. These suburbs contain some of the most expensive houses in Melbourne and it has been this way for years. If you mention Toorak or East Melbourne in conversation, cafes and restaurants probably don’t come to mind. In this case, it seems the good cafes and restaurants appear first, this draws people to an area, and then these in turn drive house prices up.


    As mentioned above, what creates a good lifestyle is unique for each individual. However, if you enjoy good food and coffee, it is worthwhile thinking about the proximity of your property to restaurants and cafes. Without even realising it, you may enjoy living in one location more than another simply because of the convenience of living amongst the atmosphere created by popular restaurants.

    Overall, cafe density, cafe quality, transport, and walkability are all interrelated and can be an asset to any property. Part 1 of the lifestyle report looked at the relationship between walkability, transport and house prices. It was found that there is a positive correlation between walkability and house price. Part 2 of the lifestyle report considered how cafes and restaurants influence house prices and people’s drive to live somewhere. Cafes and restaurants can be a factor which attracts people to buy a house in an area. Thus indirectly, cafes and restaurants add value to the houses in a particular suburb. Gertrude street, Collingwood is the perfect example of this.

    In conclusion, knowing which suburbs in Melbourne have a higher density of good cafes, restaurants and accessible train stations or tram stops could have value in forming future decisions about where to buy in Melbourne. This is turn will influence property price based on competitive demand for houses in more walkable areas. It will be interesting to see if in five years time, this would be reflected in house prices in suburbs such as Toorak, which is not known for it’s coffee or walkability, but still has the most expensive houses.