Data from CoreLogic in the last quarter of 2018 showed that Melbourne’s property market was the weakest performing capital city in Australia, with dwelling values falling 2.1% over quarter. Will the downward trend continue this year, or will we start to see more positive results? Here’s our Melbourne property market forecast for 2019.
Melbourne house prices tipped to fall before an uplift
Melbourne property values will continue to fall this year before seeing a price rise towards the end of 2019 and into 2020, according to Domain’s Property Price Forecasts. The report suggests that dwelling values in Melbourne will decline by about 1% in 2019, a more moderate drop than the 9% decline seen in 2018.
Overall, property values are expected to drop by around 11% from their peak of $910,000 in December 2017, to around $800,000 in mid-2019.
Following that, however, it’s predicted that Melbourne property values will rise by approximately 4% going in 2020. This will be thanks, in part, to Victoria’s decreasing unemployment rate and population boom.
As is the case in Australia’s other capital cities, the state of lending conditions will also impact Melbourne property prices in 2019. Tighter home loan criteria and a crackdown on interest-only loans could see property values stagnate or decline further, while an easing of lending conditions could drive an uplift in prices sooner than expected.
Predictions for Melbourne home prices, and housing investment, year to December 2019
|Economist||Melbourne home prices||Housing Investment|
|Source: ABC News|
Melbourne unit prices reflect population growth
In a slightly more favourable outlook than houses, Melbourne unit prices are expected to grow by about 1% in 2019 and 2020, in line with the city’s record population growth, according to Domain’s Property Price Forecasts report.
While the national population grew by 1.6% in the 2016-27 financial year, Victoria saw a 2.3% increase in its population. Experts predict that Melbourne will surpass Sydney as the largest city of Australia by as early as 2031 – and that will continue to fuel demand for apartments and housing in general.
“While new dwelling completions are forecast to continue to rise through 2018, as the large pipeline of apartment buildings under construction work their way to completion, supply will be largely met by population growth,” BIS Oxford Economics analyst Angie Zigomanis said.
Regional areas offer best buying opportunities
Regional cities close to Melbourne are performing particularly well, driven by demand from first homebuyers and young families. Ballarat, Geelong and Latrobe Gippsland are currently the strongest regional areas in Australia.
CoreLogic’s December 2018 Home Value Index Report pinpointed regional Victorian cities as key growth areas in 2018, with strong gains recorded in the Latrobe-Gippsland region (up 8.7%), Ballarat (8.3 %), Geelong (8.2%) and Bendigo (4.5%). The report attributed regional Victoria’s positive performance to the fact it offered “better housing affordability, more sustainable long term growth trends and improving economic and demographic conditions”.
Looking further down the track in 2019, the housing markets in Shepparton, Warrnambool, Ballarat, Bairnsdale and Bendigo “all look promising” this year, according to research firm Propertyology. The company’s head of research predicts that Victoria’s best buying opportunities “for the foreseeable future” will be in these regional areas.
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