Market Update
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From our corporate director
Dean O’Brien
Inflation Insights
July's underlying inflation in Australia was 0 8%, below the 1% forecast, with annual inflation at 3.8%. This positively impacted the Australian Stock Market, which saw its strongest month this year, hitting an all-time high Economists predict a potential rate cut later this year, with Comm Bank forecasting a reduction in November. In the US, a rate cut is expected in September, while New Zealand anticipates three rate cuts by year-end
Market Trends:
National dwelling values rose by 0.5% in July, marking 18 consecutive months of price increases However, Melbourne experienced a 0 4% decline in July and a 0 9% decline for the quarter. The median home price in Melbourne for combined dwellings is $781,949, ranking 4th among capital cities. It is now only slightly more expensive than Adelaide and Perth Melbourne has higher-than-average listing numbers, leading to price retreats over the last four months, while Brisbane, Adelaide, and Perth have supply more than 40% below average, driving price increases
Auction Market:
Victoria saw over 2,102 auctions in July, with a clearance rate of 78.75%, indicating strong buyer interest
Rental Market:
Rental yields in Victoria remain solid, with investor confidence rising and a 3 4% increase in investor lending reported by the ABS
Although rental growth has slowed, it is still strong, comfortably exceeding the pre-COVID 10-year average of 2.7%. Nationally, building approvals fell by 6.5% in July, with a 13.5% decline in Victoria, suggesting rental prices may continue rising due to limited new housing supply
For Buyers and Sellers:
Buyers should be aware of potential rate cuts and fluctuating property prices In Melbourne, increased listings require careful consideration. Sellers need to price properties accurately in this competitive market. Always seek independent advice before making property decisions
Regards
Dean O’Brien
Step 1: Assessment
Simply call and speak to our experienced Growth Specialist who will review and assess, collecting some information to commence the hand over process
Step 2: Authorise
At this stage, we will gather all required documentation authorising our team to take over the file and begin an in depth analysis of your property
5 reasons why OBrien
Step 3:
OBrien Real Estate hand over We take it from here, managing contacts, assessments, and file transfers We'll also liaise with your tenant for inspections or introductions
We sell more.
$875,000 - $920,000
$845,000 - $895,000
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We sell more.
snapshot of last month’s sales
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Why the Melbourne property market is taking longer to bounce back
Melbourne has long been one of Australia's strongest property markets alongside Sydney, thanks to its robust job market, high migration from overseas and interstate, and its reputation as one of the world's most liveable cities.
However, in recent years home value growth in Melbourne has slowed while other cities continue to experience strong growth For the first time in 14 years, Brisbane's median home value surpassed Melbourne's in March, overtaking Melbourne as the second most expensive city in Australia
PropTrack's automated valuation model (AVM) showed that Brisbane's median house values grew by 4.4% during the quarter, compared to 0 1% in Melbourne
For units, Brisbane values grew by 7 4%, while Melbourne experienced a decline of -0 1%
By June, Brisbane's house value reached $951,000 compared to Melbourne's $912,000, while Brisbane's unit value was $633,000 against Melbourne's $619,000
This is not a new trend. Melbourne's year-on-year growth has been minimal at 0.3% for houses and 0.2% for units, whereas Brisbane has experienced house value growth of 14 7% and unit growth of 20 3%
Both Adelaide and Perth have also experienced strong growth over the past 12 months, suggesting that house and unit prices in these cities could surpass Melbourne's if these trends continue.
So, why is Melbourne struggling to achieve the home price growth seen in other cities?
Firstly, many of Melbourne's issues stem from the pandemic, which hit the city harder than others
Melbourne lost more of its population to interstate migration and faced closed borders, which led to many investors leaving the market due to low demand for rental properties in the inner city
While cities less affected by lockdowns, such as Brisbane, Adelaide, and Hobart, attracted interstate migrants and boosted their property markets, Melbourne (and to a lesser extent Sydney) struggled to recover from the pandemic's impacts.
Home price growth in Melbourne remained sluggish throughout 2021 And by the time the first interest rate hike occurred in 2022, Melbourne was already behind other cities in price growth
As of June 2024, Melbourne's prices were 3 89% lower than their previous peak before the most recent downturn In contrast, Sydney, Brisbane, Adelaide, and Perth had already surpassed their previous highs to reach new price peaks
However, buyer expectations have been tempered by reduced borrowing power and a more cautious view of the property market and economy, making them unlikely to pay the high prices seen in more prosperous times
In June, over half of the properties sold in Melbourne went for the asking price, more than one-third sold for less, and only 14% sold for above the asking price
In contrast, over half of the sales in Brisbane and Adelaide went for more than the asking price, and in Perth, 77% exceeded the asking price
This conservative behavior among Melbourne buyers partly explains the city's lower median price growth compared to other cities Despite this, it does not indicate that Melbourne's property market is faltering Buyers and sellers are still active, and most market indicators remain positive
It is more likely that Melbourne is simply undergoing a period of adjustment, with prices normalising after decades of strong growth.
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