Melbourne's property market has been in a period of slow growth over the past year due to the downturn brought by the COVID-19 pandemic, but prices are now starting to inch back up to where they should be as the city continues to lead positive growth on the market.
The city is welcoming its first spring selling season without restrictions since 2019, and many are wondering if this will be the start of a more significant rebound in the housing market.
So, in this article, let's discuss the Melbourne Semi-Monthly Property Market Update and see if we can see signs of improvements.
Unfortunately, the market downturn is far from over for Melbourne residents. According to the latest data, dwelling values in the city have declined for the seventh month in a row.
Propertyupdate reports that the property price in Melbourne decreased by 0.2% from the previous week, 1.2% from the last month, and 3.1% over the previous 12 months.
This is obviously bad news for those who were hoping that the worst was behind us. However, it's important to remember that Melbourne is not alone in this regard. Sydney values have also been declining steadily, and other cities are also starting to see accelerating declines.
So what does this all mean for those trying to buy or sell property in Melbourne? Well, it's certainly not going to be easy.
According to CoreLogic's most recent report, all Australian capital cities—aside from Darwin—are now seeing a downturn.
Victoria's property prices are still comfortably above pre-pandemic levels. Still, the equity buffer looks likely to be squeezed further as the Reserve Bank of Australia presses its battle against the surging inflation. This is according to Tim Lawless, CoreLogic's research director. He said that while Melbourne's prices had stabilised recently, they were still well below their peak levels from a few years ago.
Interest rates had been rising, as we are all aware, and in the first week of September, the RBA increased the official cash rate once more by 50 basis points to 2.35%.
Melbourne's real estate market is struggling as a result of the ongoing rate increases. The maximum loan sizes available to prospective purchasers have decreased by nearly 20% since the cash rate started to rise in May, according to the RBA. This is probably going to affect how affordable housing is in the city and put pressure on renters as well.
Will the Spring season change the property market in the coming months? Or will it still make its downturn?
According to a report, the flow of new listings coming onto the market was expected to be 21.8% above the five-year average for this time of year, while home sales were estimated to be -8.7% below the prior five-year average over the three months to August.
Since less demand and more supply were being introduced to the market, total inventory levels began the spring season around 17% higher than usual, giving potential buyers more options. (source: metropole)
However, if you look deeper into the data, you'll see that the city's housing and unit sectors both had monthly and annual declines.
Data shows that prices fell by 1.6% in August, compared to a decline of 1.5% in July. This brings the city's price loss to nine months in a row, bringing the overall decrease since the year's beginning to 4.7%.
Despite the ongoing declines there are indications that it is slowing down. Prices dropped by 2.1% and 2% in May and June, respectively, so the drop in August is a small improvement. (source: Smart Property Investment)
The Real Estate Institute of Victoria (REIVmost )'s recent statistics reveal that Melbourne's real estate market is cooling off, with unit values declining by 0.6% over the previous year.
Contrastingly, the city has experienced rapid expansion in recent years, with average unit values more than doubling since 2009.
The average unit or apartment price in Melbourne is currently $608,281, according to figures from the REIV, a decrease of $6,000 during the four weeks ended March 31.
While the market may be cooling off, it is still possible to find good deals on properties in Melbourne. With careful research and negotiation, it is still possible to purchase your dream home.
Get in touch with a reputable broker or lender to start your home-buying journey in Melbourne!