Melbourne’s housing market showed signs of life as the city’s median house price rose 1.4% to $826,500 and the unit price increased 1.8% to $597,000 in 2018.
Vendors are still able to sell their homes at good prices despite low confidence, sluggish auction clearance rates and a 20% drop in residential property sales in 2018, according to Robyn Waters, Real Estate Institute of Victoria (REIV) president.
“It might take you a bit longer to sell and you might have to put in a bit more effort, but the big picture is showing that house prices have increased slightly in Melbourne over the past 12 months. Confidence is a major factor in the property market and this latest REIV data is showing that the market overall is steady, coming off an increase in the median house price of 13.2% in 2017, which could not be sustained,” she said.
The top 20 suburbs of 2018 were all in the outer ring, with most located in the expanding south east and Mornington Peninsula/Bayside areas. The report showed that new transport infrastructure, such as Skyrail and the Monash Freeway widening, is likely driving this growth.
REIV found that Metropolitan Melbourne’s median house price dropped by 3.7% to $796,500, while Regional Victoria’s rose by 2.5% over the December quarter.
The reason for the shifts? Properties are being tightly held in Inner Melbourne as vendors wait out this period. The markets in Outer Melbourne and Regional Victoria, meanwhile, are more robust since buyers prefer to purchase more affordable options.
“There is no doubt that the banks’ tighter lending conditions are contributing to this trend, as are incentives for first-home buyers which encourage the purchase of affordable properties, more likely to be found in Outer Melbourne or Regional Victoria,” Waters said.
Malvern East, Thornbury, and Hawthorn were some of the inner suburbs that performed well in the last quarter of 2018, driven by an increase in the number and value of sales from the September quarter.
This result is a good indication that confidence is starting to bounce back in the prestige areas, according to Waters.
REIWA reported that Regional Victoria’s property market was the top performer in 2018, with a 5.5% annual increase in the median house price to $400,000 and yearly rises of more than 20% in the top five towns.
“The 2.5% increase in the median house price for the December quarter was the second strongest for the year, in contrast to Metropolitan Melbourne, which had its weakest quarter. Our latest data showed some surprise quarterly increases in inland Victoria, with Golden Point, Irymple and Daylesford all achieving an uplift of more than 9%,” Waters said.
REIV forecasted Victoria’s property market to remain steady in the first half of 2019 as market players wait for the result of the banking Royal Commission and federal election, but things are set to improve in the second half of the year.
