The Australian housing market has fallen for the 17th consecutive month, but with the rate of decline easing up in capital cities like Melbourne, buyers are slowly regaining confidence in the market.
According to data from CoreLogic, property prices across the nation fell -0.5% in April, bringing the total change in housing prices to -7.2% across Australia. In line with this trend, Melbourne’s property values also dipped again in April, with a -0.6% decrease in prices compared to March 2019 - which is slightly above the national average decrease of -0.5%.
This trending decline brings the total drop in the Melbourne property market to -7.2% over the past year, and the median house price to $621,759. The Melbourne property clearance rate at auction was also the highest it has been in six months, with Domain reporting a 50.4% clearance rate for houses and units combined.
While the Melbourne property market crash hasn’t ended, CoreLogic’s head of research Tim Lawless says the downturn is slowing in Melbourne - leaving homeowners and investors hopeful that the housing slump may be about to reach its trough.
“The improvement in the rate of decline is attributable to an easing in the market downturn across Sydney and Melbourne where values were previously falling much faster,” he says. “Melbourne values were down -1.5% in December, with the rate of decline improving to -0.6% in April.“
Matthew Hassan, an economist at Westpac, echoes this sentiment in his Melbourne property market forecast.
"While much of the initial moderation in monthly declines appeared to be due to seasonality, the April update shows a clearer shift over and above seasonal variations," he wrote.
While houses in Melbourne saw a significant decrease in Q1 2019, falling -13% year on year, unit prices fared better with a decrease of only -4%. The resilience of units is largely due to affordability constraints for buyers, as well as an increased number of first home buyers looking to get into the market as house prices continue to drop.
This, coupled with increased property listings and longer sale times, show that buyers are in a strong position to buy going forward: at the end of March 2019, there were more than 36,000 properties advertised for sale, and the typical selling time had more than doubled from 28 days to 61 days compared to March 2018.
What’s more, Melbourne property market predictions show that while the housing market is expected to continue its decline into next year, the market should start to show signs of recovery in mid-2020 - largely due to strong economic factors, an uptick in investment, and a boost in migration.
In 2019, Melbourne was ranked as the Asia Pacific’s number one city for property investment, outranking global cities including Singapore, Sydney, Tokyo, and Osaka. In addition, Melbourne’s population is likely to increase almost 10% in the next four years, which means the city can expect a lift in demand for housing - and home buyers may find more opportunities to purchase properties as rental investments.
Experts also predict that, should the upcoming Federal Election swing Labor’s way, the new negative gearing policies and changes to capital gains tax could have a positive effect on the nation’s house prices - particularly in capital cities like Melbourne.
"You have to expect if you remove an incentive from the marketplace that would be an overall net negative and we feel that there would be some level of an adjustment in the market place and a lower level of investment activity," Tim Lawless told the ABC.
"Look at it from say a first home buyer's angle, less competition with investors and perhaps some further downwards pressure on prices would probably be seen as a very positive thing, considering affordability constraints in markets like Sydney and Melbourne are still quite pronounced."
Wondering how the housing slump has affected the value of your home? Get a free online property report from Upside today and find out more on the median house price by suburb in Melbourne.