Melbourne Housing Market Crash: Current Market Situation and Future Prediction
The Melbourne housing market, a crucial indicator of economic health and individual wealth, has recently gone through a significant tough time that demands attention. With property values and homeowners’ financial security at stake, understanding the current market situation and predicting its future trajectory becomes essential.
It’s very important to know about the current state of the housing market, what that means, and the implications of what might happen next, especially if you’re an investor.
In this article, we will analyze the Melbourne housing market crash, current market situation and future prediction, and help you navigate through the complexities to shed light on everything you should know about it.
Melbourne Housing Market Insights
As Melbourne’s real estate market enters a new phase of the property cycle, it’s important to note that the concept of the “Melbourne housing market” is not a singular entity.
The market is made up of different parts and areas, each having its ways of working and trends. This situation presents a chance to enter the property market, as the Melbourne market begins to regain momentum.
Median Prices For Melbourne Properties
Below are the median prices for Melbourne properties as of July 2023 according to Core Logic.
|Capital city dwellings
|Capital city houses
|Capital city units
Insight into Rental Property in Melbourne
Presently, Melbourne is grappling with a significant rental emergency with minimal vacancy rates. In the last year, there has been a staggering 23.1% surge in apartment rents within the city, rendering the task of finding and affording suitable housing extremely challenging for tenants.
The median requested rents for units in Melbourne have soared to an unprecedented $480 per week during the March quarter. This value showcases a $90 addition in comparison to the prior year and a $30 increase from the previous quarter.
Evolution of Melbourne Urban Housing
In the next five years, more buildings will be built closer together in important areas of Melbourne. This is happening because it’s becoming harder for people to afford living spaces, so the buildings will be closer together.
The government and city plans will also try to make use of the places that are already built, like around transportation spots and important places, to make the city more organized. Melbourne might experience more than half of its new homes being medium in size. People are also starting to like the idea of making the most of the spaces they already have.
A big problem Melbourne residents are facing is that building materials have become much more expensive since the pandemic. It’s harder to get what is needed to build, like materials and workers. Because of this, the cost of building has skyrocketed.
The question remains uncertain: will Melbourne’s robust demand, limited supply, and reasonable affordability counteract the impact of surging interest rates that make it difficult for borrowers to secure loans?
The significant increase in mortgage payments over the past 13 months, coupled with the ongoing cost of living challenges, might motivate homeowners to consider selling.
If there’s an increase in new housing inventory, it could potentially exert a downward influence on property values.
Future Predictions of the Melbourne Housing Market
Melbourne’s real estate market is undergoing a transition towards a focus on quality, resulting in distinct divisions within different sectors. This shift signifies a move towards a more typical property market.
At present, there’s a clear preference for high-quality A-grade homes and investment-grade properties due to strong demand, leading to a shortage of supply. On the other hand, B-grade properties are experiencing extended time on the market, while well-informed buyers are steering clear of C-grade properties.
This situation presents an opportunity for potential home buyers and property investors who are looking at the long term. While some buyers may have temporarily left the market, the natural rhythm of life in Melbourne will persist – including marriages, divorces, growing families, and the need for relocations.
As the realization sets in that interest rate increases are stabilizing (with the end in sight) and inflation is under control (past its peak), these potential buyers are expected to reenter the market with renewed enthusiasm.
Indeed, buyers are already making a comeback to the market; however, the sentiment among sellers is still catching up.
In addition, with the recent reopening of international borders, Melbourne is on the verge of attracting a new wave of residents, adding more pressure to the property markets, particularly in the rental sector.
Looking to Buy a Property in Melbourne?
Melbourne’s housing values have seen a modest increase of 1.6% from March 2020 to May 2023, a figure notably lower than other cities in Australia.
Despite this slower growth, Melbourne’s comparatively lower rise in house values could offer potential home buyers an advantage in terms of affordability, making it a more appealing choice.
However, the uncertainty surrounding high-interest rates might counterbalance Melbourne’s advantages in terms of demand, supply, and affordability. Difficulty in accessing credit could arise, potentially leading homeowners to sell due to higher mortgage payments and increased living costs. This could result in a rise in new property listings and downward pressure on housing prices.
Much like other major cities in Australia, Melbourne’s property market is diverse, with strong demand for top-tier homes and investment-grade properties that are more likely to maintain their value.
In addition, Melbourne’s auction clearance rates have remained robust throughout the current year, further indicating the market’s resilience and depth.
The housing market in Melbourne has gone through a tough time. Property prices have changed, renting has been tricky, and what buyers want has also changed. As the city starts focusing on better properties, some types of properties are in demand than others.
Even though house prices haven’t gone up quickly, it’s still quite affordable to live in Melbourne. But there’s a worry that loan rates might go up, which could change things. The market has stayed strong, as shown by good auction results, and people are expected to get more interested in buying again as the economy gets better.
But how many houses are available, how many people want to buy, how much people can afford, and other factors like the economy will still affect how Melbourne’s housing market looks.