After falling more than 11% in 2018-19 the Melbourne property market has made the strongest recovery in modern history.
In a recent housing update, Westpac gave the following summary plus forecasts for the Melbourne real estate market…
Victoria’s price recovery has gained strong momentum with increases running at a double digit annual pace over the last 3mths and prices having now recovered over half of their correction.
However the detail is still more mixed with price performances uneven, turnover at low levels and listings showing a signifi cant overhang of unsold units.
Housing–related sentiment points to more strength ahead although the pace of the rebound may moderate.
The price detail shows a varied performance across segments and sub–regions, some of which reflects the more pronounced corrections for houses and top and middle tier properties.
Melbourne unit prices are seeing better annual price gains but performances across price tier are now fairly even on an annual basis.
The turnaround continues to be led by Melbourne’s Inner East, which is coming out of a larger correction, with a more subdued upturn in the West and in regional areas.
The Victorian Consumer Housing Sentiment index has continued to lift over the last 3mths but is now being entirely driven by rising price expectations.
As with NSW, assessments of ‘time to buy’ have weakened back to below average levels suggesting affordability pressures are starting to re-emerge (Melbourne prices are now just 4.5% below their previous peak).
Listings metrics show some improvement with sales mostly outpacing new listings in recent months and the overhang of unsold stock down 18% from the peak at the start of the year.
However, the overhang of units remains high and is declining more slowly.
The stronger price performance of units overall may indicate a ‘two tier’ market with few properties transacting in the weaker tier.
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