Melbourne's housing market insights
While Melbourne's property market is experiencing a flat patch, the long term fundamentals are strong. This creates a window of opportunity to get into the property market before the Melbourne market picks up again.
MELBOURNE'S PROPERTY PRICES TREND
According to CoreLogic, Melbourne dwelling prices...
remained flat over the last week
dropped -1.1% over the last month
dropped -5.6% over the last 12 months
Dr. Nicola Powell, chief economist of Domain explains:
The premium price-point of Melbourne’s housing market is leading the downturn as tends to historically be the case, as the inner east recorded the most significant house price decline of 6.1% over the quarter.
Areas that have a higher purchase price and therefore greater debt place households in a vulnerable position to rising interest rates. Interest rate hikes and strong inflation levels continue to damage borrowing capacity, already adding $726 a month to a $1 million home loan. This will weigh on buyer sentiment, placing a brake on housing demand and price.
To date, Melbourne’s housing downturn has not gained momentum irrespective of the aggressive hikes in interest rates over recent months although the risks remain.
Currently, the total advertised supply is sitting 7% higher than last year and 18% above the five-year June average – shifting the balance of power to buyers.
At the same time, new listings have also started to track lower, indicating home owners are not rushing to sell as housing conditions cool and home loan rates rise but rather choosing to wait.
It suggests that the build-up of supply is down to a pullback in the number of sale transactions. Selling conditions have become more challenging, auction clearance rates have weakened to an almost two-year low of 58% over the June quarter and overall properties are spending longer on the market. This is creating a window of opportunity who homebuyers and property investors with a long-term perspective. Sure, many discretionary buyers and sellers have left the market at present, but life will go on in the Victorian capital – people will get married, people will get divorced, families will have babies and many Melbournians are going to need to move house.
When they realise interest rates have dropped, and inflation is it coming under control they will come back into the market with a vengeance.And with the recent opening of international borders, Melbourne will be a major recipient of new residents putting extra pressure on our property markets, particularly the rental markets. Melbourne house prices and market activity were adversely affected by its extended lockdowns during 2020-21, but now Melbourne property is on the move again.
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