As the Australian property market downturn slows, Melbourne house prices are finally trending upward again – a sign that lower mortgage rates and improved sentiment are already having a flow-on effect for housing market conditions in the city.
According to CoreLogic’s Hedonic Home Value Index for July 2019, Melbourne house prices increased by 0.2% over the month, the first rise since the market moved through a peak in November 2017. Melbourne’s prestigious Inner East led a quarterly rise with property values up 2.7%. Regional Victoria also remains a solid housing market performer, with four of the top 10 highest capital gains located in this region.
Melbourne property market forecast
Domain’s Property Price Forecast report for June 2019 predicts that in 2020, house prices in Melbourne will grow by 1% to 3% and unit prices by up to 2%. By the end of 2020, Melbourne house prices are expected to be about 10% below their 2017 peak, but still be 50% higher than they were in 2012.
Increasing buyer interest is also showing promise for the Melbourne property market, with auction clearance rates averaging above 60% throughout June, the highest average in over a year. The average number of attendees at inspections was also up 16% in June, compared to before the election.
Likewise, clearance rates in Melbourne’s more expensive areas have been highest, which is an important metric because the top end of the Melbourne market generally leads the overall market.
What’s impacting Melbourne property market conditions?
Tim Lawless, CoreLogic’s Head of Research, said in a statement that the Coalition win at the election, along with relaxed lending criteria, are bolstering the property market in Melbourne and around the country.
“Potentially we are seeing the first signs that the top end of Sydney and Melbourne’s housing markets are leading the recovery trend,” he said.
“The improvement in housing market conditions over the first five months of the year has largely been organic, however since mid-May there has been a raft of announcements that should provide a further positive flow through to housing demand.”
“Stability within the federal government, along with the removal of uncertainty surrounding changes to negative gearing and capital gains tax discounts, has brought about increased certainty and boosted confidence in the housing market.”
According to Lawless, these factors, together with ongoing strong population growth, are driving the property turnaround.
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