Recent Melbourne property news has painted a grim picture of falling housing prices and even a complete market crash – but is it all doom and gloom?
CoreLogic recorded an aggregate yearly downturn of -4.93% on property values in Sydney, Melbourne, Brisbane, Adelaide, and Perth, with Sydney seeing the largest drop out of the five capital cities.
Likewise, monthly CoreLogic data from October showed Melbourne’s housing market was the weakest performing capital city over the past three months, with dwelling values falling 2.1% over the last quarter, and the upper quarter of Melbourne’s housing market (properties valued over $920,000) bearing the brunt of the downturn.
However, median property prices in Melbourne have increased by 41.5% over the past five years and 77.3% in the past decade. This helps put a quarterly 2.1% drop into perspective as being what many experts agree is a correction, not a crash.
Melbourne ranks as one of the 10 fastest growing large cities in the developed world, with its population likely to increase by around 10% in the next four years. This is likely to boost demand – and thus values – of properties in the city and surrounding suburbs.
Domain’s recently released Property Price Forecasts Report projects a reset of Melbourne house prices to late 2016 levels, with a median of just above $800,000 by the middle of next year. From there, prices are expected to increase again.
Units are projected to fall 3% from their peak and bottom out by the end of this year, ahead of a predicted rise in 2019. This could see more Melbourne buyers leveraging off-market apartments as an investment opportunity.
AMP Capital chief economist Shane Oliver told Domain he believes the downturn will continue until 2020 but that there is a possibility of a turnaround as early as next year.
“I’m assuming the slowdown is relatively contained. But it could come a bit earlier. If the declines are steeper, it could bottom out in 2019,” he said. “Banks and borrowers will have adjusted to the new world, and we might start to see lending growing again from 2019.”
Domain economist Trent Wiltshire adds that economic fundamentals like low rates, low unemployment, and strong immigration would serve to keep Melbourne and other markets robust despite the recent price falls.
How much the Melbourne property market will soften is yet to be revealed, but experts agree that there are still plenty of investment opportunities in Melbourne for smart investors who know where to look.
As DG Institute's Dominique Grubisa tells Smart Property Investment, "There are plenty of great deals available for the taking in a weaker property market if you can source finance and creatively add value to property deals.”
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