Compounding
Well at 5% growth it is feasible that the property has grown at that rate each year since 1864 (I don't know prices in Melbourne, so not sure what they are now), but $500K doesn't seem totally unreasonable. See figures below.
Year 5% pa growth 7% pa growth
1864 $400.00 $400.00
1865 $420.00 $428.00
1866 $441.00 $457.96
1867 $463.05 $490.02
1868 $486.20 $524.32
1869 $510.51 $561.02
1870 $536.04 $600.29
1871 $562.84 $642.31
1872 $590.98 $687.27
1873 $620.53 $735.38
1874 $651.56 $786.86
1875 $684.14 $841.94
1876 $718.34 $900.88
1877 $754.26 $963.94
1878 $791.97 $1,031.41
1879 $831.57 $1,103.61
1880 $873.15 $1,180.87
1881 $916.81 $1,263.53
1882 $962.65 $1,351.97
1883 $1,010.78 $1,446.61
1884 $1,061.32 $1,547.87
1885 $1,114.39 $1,656.22
1886 $1,170.10 $1,772.16
1887 $1,228.61 $1,896.21
1888 $1,290.04 $2,028.95
1889 $1,354.54 $2,170.97
1890 $1,422.27 $2,322.94
1891 $1,493.38 $2,485.55
1892 $1,568.05 $2,659.54
1893 $1,646.45 $2,845.70
1894 $1,728.78 $3,044.90
1895 $1,815.22 $3,258.05
1896 $1,905.98 $3,486.11
1897 $2,001.28 $3,730.14
1898 $2,101.34 $3,991.25
1899 $2,206.41 $4,270.63
1900 $2,316.73 $4,569.58
1901 $2,432.56 $4,889.45
1902 $2,554.19 $5,231.71
1903 $2,681.90 $5,597.93
1904 $2,816.00 $5,989.78
1905 $2,956.80 $6,409.07
1906 $3,104.64 $6,857.70
1907 $3,259.87 $7,337.74
1908 $3,422.86 $7,851.38
1909 $3,594.00 $8,400.98
1910 $3,773.70 $8,989.05
1911 $3,962.39 $9,618.28
1912 $4,160.51 $10,291.56
1913 $4,368.53 $11,011.97
1914 $4,586.96 $11,782.81
1915 $4,816.31 $12,607.61
1916 $5,057.12 $13,490.14
1917 $5,309.98 $14,434.45
1918 $5,575.48 $15,444.86
1919 $5,854.25 $16,526.00
1920 $6,146.96 $17,682.82
1921 $6,454.31 $18,920.62
1922 $6,777.03 $20,245.06
1923 $7,115.88 $21,662.22
1924 $7,471.67 $23,178.57
1925 $7,845.26 $24,801.07
1926 $8,237.52 $26,537.15
1927 $8,649.40 $28,394.75
1928 $9,081.87 $30,382.38
1929 $9,535.96 $32,509.14
1930 $10,012.76 $34,784.78
1931 $10,513.40 $37,219.72
1932 $11,039.07 $39,825.10
1933 $11,591.02 $42,612.86
1934 $12,170.57 $45,595.76
1935 $12,779.10 $48,787.46
1936 $13,418.05 $52,202.58
1937 $14,088.96 $55,856.76
1938 $14,793.40 $59,766.74
1939 $15,533.07 $63,950.41
1940 $16,309.73 $68,426.94
1941 $17,125.21 $73,216.82
1942 $17,981.48 $78,342.00
1943 $18,880.55 $83,825.94
1944 $19,824.58 $89,693.76
1945 $20,815.81 $95,972.32
1946 $21,856.60 $102,690.38
1947 $22,949.43 $109,878.71
1948 $24,096.90 $117,570.22
1949 $25,301.74 $125,800.13
1950 $26,566.83 $134,606.14
1951 $27,895.17 $144,028.57
1952 $29,289.93 $154,110.57
1953 $30,754.42 $164,898.31
1954 $32,292.15 $176,441.19
1955 $33,906.75 $188,792.08
1956 $35,602.09 $202,007.52
1957 $37,382.20 $216,148.05
1958 $39,251.31 $231,278.41
1959 $41,213.87 $247,467.90
1960 $43,274.56 $264,790.65
1961 $45,438.29 $283,326.00
1962 $47,710.21 $303,158.82
1963 $50,095.72 $324,379.93
1964 $52,600.50 $347,086.53
1965 $55,230.53 $371,382.59
1966 $57,992.05 $397,379.37
1967 $60,891.66 $425,195.92
1968 $63,936.24 $454,959.64
1969 $67,133.05 $486,806.81
1970 $70,489.70 $520,883.29
1971 $74,014.19 $557,345.12
1972 $77,714.90 $596,359.28
1973 $81,600.64 $638,104.43
1974 $85,680.68 $682,771.74
1975 $89,964.71 $730,565.76
1976 $94,462.95 $781,705.36
1977 $99,186.09 $836,424.74
1978 $104,145.40 $894,974.47
1979 $109,352.67 $957,622.68
1980 $114,820.30 $1,024,656.27
1981 $120,561.32 $1,096,382.21
1982 $126,589.38 $1,173,128.97
1983 $132,918.85 $1,255,247.99
1984 $139,564.79 $1,343,115.35
1985 $146,543.03 $1,437,133.43
1986 $153,870.19 $1,537,732.77
1987 $161,563.69 $1,645,374.06
1988 $169,641.88 $1,760,550.25
1989 $178,123.97 $1,883,788.76
1990 $187,030.17 $2,015,653.98
1991 $196,381.68 $2,156,749.75
1992 $206,200.77 $2,307,722.24
1993 $216,510.80 $2,469,262.79
1994 $227,336.34 $2,642,111.19
1995 $238,703.16 $2,827,058.97
1996 $250,638.32 $3,024,953.10
1997 $263,170.23 $3,236,699.82
1998 $276,328.75 $3,463,268.81
1999 $290,145.18 $3,705,697.62
2000 $304,652.44 $3,965,096.46
2001 $319,885.06 $4,242,653.21
2002 $335,879.32 $4,539,638.93
2003 $352,673.28 $4,857,413.66
2004 $370,306.95 $5,197,432.61
2005 $388,822.30 $5,561,252.90
2006 $408,263.41 $5,950,540.60
2007 $428,676.58 $6,367,078.44
2008 $450,110.41 $6,812,773.93
2009 $472,615.93 $7,289,668.11
2010 $496,246.73 $7,799,944.87
2011 $521,059.06 $8,345,941.02
2012 $547,112.02 $8,930,156.89
2013 $574,467.62 $9,555,267.87