What is happening to property prices in Melbourne? The Melbourne property market is causing concern for both buyers and sellers. As of November 2023, the market appears to be on an upward trend.
Experts are reporting an increase in house prices in recent months after having dipped in early 2023. And in spite of rising interest rates, there is optimism in the property market.
In this article, we will explore the current state of Melbourne’s property market, taking into account recent trends and predictions for the future. We will examine the factors that are driving changes in the market, as well as the challenges that buyers and sellers may face.
Finally, we will provide some tips for navigating the market and making the most of the opportunities available.
Current State of Property Prices in Melbourne
The property market in Melbourne has experienced fluctuations over the past few years. In this section, we will examine the current state of property prices in Melbourne and analyze the various factors that are driving the market.
CoreLogic reported a 0.5% increase in house prices in October alone, following a revised 0.7% rise in September. With property prices in Melbourne having fallen by 7.9% from their cyclical peak to their recent trough in January 2023, buyers and sellers are keenly watching the market.
Yet, the market has shown resilience with prices consistently rising for the last ten months – now up 4.5% since January 2023 However, as with any market, fluctuations are to be expected, and buyers and sellers need to stay up-to-date with the latest trends and developments to make informed decisions.
Melbourne House and Unit Prices
The Melbourne property market has experienced fluctuations over the past few years. According to CoreLogic, the median house price in Melbourne as of October 2023 is $776,716, which has increased by 1.5% over the past year.
“The median unit price in Melbourne is $503,000, reflecting figures from October 2022 to October 2023. These figures indicate that the Melbourne property market is currently experiencing an upswing.”
For those interested in the latest listings, explore houses for sale in Melbourne to get a real-time view of the market.
Comparative Analysis of Melbourne with Other Cities
Compared to other capital cities in Australia, Melbourne’s property market is performing robustly. Melbourne’s property prices are up 4.5% since January 2023, indicating a strong recovery phase according to Property Update.
Suburb Specific Insights
The Melbourne property market is diverse, and property prices vary significantly depending on the suburb.
“The median house price in the inner east is $1,812,500, while the median house price in the outer east is $1,100,000. The median house price in the inner suburbs is $1,400,000, while the median house price in the inner south is $1,590,000.”
These figures indicate that property prices in the inner suburbs are higher than those in the outer suburbs.
Economic Factors and Market Trends Affecting Melbourne Property Prices
Overview of Recent Trends
Melbourne’s property market has experienced significant fluctuations in recent years. After a robust growth period through 2020 and 2021, where housing values surged by 15.8%, the market witnessed a downturn with values dropping by 7.9% from their peak in March 2022 to early 2023.
However, recent trends indicate a recovery, with consistent price rises over the past months, marking the beginning of a new growth cycle.
Key Economic Influences
Several economic factors have influenced Melbourne’s property market:
- COVID-19 Impact: The pandemic and subsequent lockdowns, particularly in Melbourne, had a profound impact, leading to economic uncertainty and fluctuating consumer confidence.
- Interest Rate Changes: A series of interest rate hikes contributed to the cooling of the market.
- Population Growth: Melbourne’s population has been steadily increasing, recently surpassing Sydney as Australia’s largest city. This growth, driven by both domestic and international migration, has a significant impact on housing demand.
- Employment Trends: The city’s strong job market, especially in sectors like finance, technology, and healthcare, continues to attract residents, influencing housing demand.
Market Segmentation and Trends
The Melbourne property market is not homogeneous; different areas and property types exhibit varying trends:
- Sub-market Variations: While some regions in Melbourne are experiencing stable or marginally rising prices, others, particularly outside the capital, are seeing continued price declines.
- Property Type Differences: There’s a notable disparity in the performance of different property types. A-grade homes and investment-grade properties are in high demand, while B-grade properties are slower to sell.
- Rental Market Dynamics: The rental market in Melbourne is currently facing low vacancy rates, leading to increased rental prices, particularly for apartments.
Despite short-term fluctuations, Melbourne’s property market has been one of the strongest performers over the past four decades.
The long-term outlook remains positive, driven by factors like population growth, economic stability, and a diverse job market. Strategic investors and homebuyers are increasingly active in the market, recognizing the potential for long-term growth.
Regional vs. Metropolitan Comparison: Melbourne’s Property Market in 2023
- Market Recovery: After a significant downturn in 2022, with a -9.6% fall in home values from the February 2022 peak, metropolitan Melbourne’s property market has seen a turnaround in 2023. This recovery is evident with a 1.5% annual increase in median dwelling prices, reaching $776,716 by September 2023.
- Housing Trends: Melbourne houses experienced a 1.2% annual increase in median price, reaching $933,281, highlighting the market’s resilience and potential for recovery.
- Unit Market: The median unit price in Melbourne increased more modestly, with a 2.0% annual rise to $612,585 by September 2023. This trend suggests a shift in buyer preferences towards larger homes or regional living.
- Steady Growth: Despite a decline for four consecutive quarters, the regional Victoria property market remains robust, with median house prices still 17% higher than two years ago. As of March 2023, the median price sits at $602,000, only 3.6% below the peak achieved 12 months earlier, as reported by Urban Property Australia.
- Rental Market Strength: Regional Victoria has witnessed a significant increase in rental demand, with weekly rental levels for both houses and units reaching all-time highs by March 2023.
- Population Shift: The regional areas of Victoria, particularly Geelong, Ballarat, and Bendigo, have seen substantial population growth, accounting for 53% of the regional area’s growth. This influx is partly due to the pandemic-induced flexibility in work.
In summary, both metropolitan Melbourne and regional Victoria have shown signs of recovery and resilience in 2023.
Metropolitan Melbourne’s property market is rebounding, particularly in the housing sector, whereas regional Victoria continues to attract significant interest due to its affordability and lifestyle appeal.
Property Tips For Melbourne
Navigating the property market in Melbourne, especially in a dynamic landscape like 2023, requires careful consideration and strategy. Here are some tips to help you make the most of the opportunities available:
- Research is Key: Stay informed about market trends, interest rate changes, and neighborhood dynamics. Regularly check listings to stay updated on price trends and available properties.
- Understand Your Finances: Know your budget and consider future interest rate changes. Pre-approval for a mortgage can give you a clear idea of your spending limit.
- Location Matters: The value of a property is heavily influenced by its location. Consider the growth potential of different suburbs and regions.
- Think Long-Term: Look for properties that will hold or increase their value over time. Consider factors like infrastructure developments and neighborhood amenities.
- Professional Advice: Consider consulting with real estate experts and financial advisors to make well-informed decisions.
In summary, the Melbourne property market is currently experiencing an upswing, with property prices continuing to rise. While there are risks associated with interest rate hikes and oversupply in the market, the long-term perspective remains positive.
Investors and home buyers should consider the flight to quality and invest in A-grade or investment-grade properties.
Suggested reading: We’ve got more for you! Expand your real estate knowledge by reading our article answering, will house prices drop in 2024 Melbourne?
FAQs on ‘What Is Happening to Property Prices in Melbourne?’
Will property prices fall further in 2023?
According to Nine.com.au, property prices are expected to continue falling in 2023 but are unlikely to negate the significant growth seen during the pandemic boom.
What will property prices be in 2025?
KPMG reports that property prices are predicted to rise by 4.9% in the next nine months and surge by 9.4% in the year to June 2025.
How much will houses cost in Melbourne in 2025?
News.com.au indicates that Melbourne’s median house price may exceed $1 million by June 2025, reaching $1,024,495, which could price out first-home buyers from most affordable suburbs.
Will 2023 be a good year to buy property?
The Australian Financial Review suggests that 2023 will continue to see a downturn in the global housing market, with Australian cities expected to experience the most significant property correction in over three decades.