With national dwelling values holding firm again, Melbourne is back in the black, recording growth on par with Hobart’s
Like Sydney, Melbourne has not had a good year, but things may already be turning around. CoreLogic’s Home Value Index for July 2019 indicates that the capital made a strong recovery in the three months to July, with an overall growth rate of 0.1% – on par with the growth of Hobart, which had led the national market for quite some time.
Melbourne has held on to its momentum over June–July, with property prices rising by 0.2%. CoreLogic head of research Tim Lawless pinpoints low interest rates, easier access to credit, post-election market confidence and tax cuts as the major drivers of positivity.
These factors are creating a favourable environment for vendors as demand soars. This demand is expected to help soak up the wave of unit supply coming in and sustain this market’s performance.
“Despite an unprecedented amount of new apartment stock entering the market, Sydney and Melbourne unit values have consistently outperformed the detached housing sector through the downturn, and this trend is continuing into the recovery phase,” Lawless says.
In the wake of this new stability, with increased borrowing and a reduced serviceability floor, buyers are looking to capitalise on the effects of the downturn and snag high-value properties that had to adjust to the environment pricewise.
“Despite value declines across the board, more expensive housing stock has generally recorded greater declines, which may be offering homeowners the opportunity to upgrade into a more expensive property,” Lawless explains.
“The middle to upper end of the Sydney and Melbourne housing markets are showing the stronger trajectory in housing values after recording deeper declines during the down phase.”
Melbourne’s recovery is also being observed in the auction market, where activity is rising again, with more bidders showing up and a larger crowd at open inspections.
“Overall, there’s significantly lower auction activity compared to the same time last year, but we expect total auction numbers to increase over the coming months as the market recovers,” says Antony Bucello, state manager at National Property Buyers Victoria.
“We are expecting the auction clearance rate to continue to increase and also expect the investor market to slowly kick into a higher gear over the coming weeks.”
SUBURB SPOTLIGHT
SEBASTOPOL:
Located on the rural-urban fringe of the thriving Ballarat region, the suburb of Sebastopol is an excellent convergence of affordability, growth and high returns.
The median house price is less than $350,000, while units sell for under $250,000, after growth of around 8% growth in the 12 months to July 2019 and double-digit growth over the past fi ve years. Rental yields are favourable as well, at around 5% for both types of properties.
House rents soared by 7.1% to hit a weekly advertised average of $300. Meanwhile, unit rents rose by 4% to hit a weekly average of $260.
Affordability: Property prices don’t exceed $350,000 despite consistent growth
Growth: Dwellings have high growth potential, having risen in value by over 20% in five years
