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The area was originally known as "Green's Landing" after a siding on the timber line. Levi Green, a well known Perth businessman, had moved into the district in 1844 and the siding was named after him. The name "Carmel" was formally adopted for the siding in 1915 and for a Townsite in 1918. The name was probably first suggested by Edward Owen who had established an orchard and founded a Methodist community near Green's property. It is a Hebrew word meaning 'park' or 'garden of God' and is also the name applied to a mountain ridge in Palestine.