Melbourne property value growth cools amid massive listings surge

Melbourne property values grew 0.6 per cent last month as “virtually every factor” driving the city’s red hot market cooled.

Melbourne property values grew 0.6 per cent last month as “virtually every factor” driving the city’s red hot market cooled.

But the slowdown was felt less in regional Victoria, where median values for all dwelling types hiked up 1.8 per cent in November to $533,279.

CoreLogic research director Tim Lawless said higher than average stock levels contributed to the reduction in price growth in the metropolitan region.

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Listing numbers are currently hovering 7.9 per cent above the city’s five-year average, according to CoreLogic’s latest Hedonic Home Value Index.

Greater Melbourne’s median house value rose 0.6 per cent in November to hit $986,992, while the unit median rose 0.5 per cent to $626,449.

This was compared to 1 per cent median value growth for both houses and units in October.

The median value for all Melbourne dwelling types is now $788,484.

CoreLogic research director Tim Lawless said “virtually every factor that has driven housing values higher lost some potency over recent months”.

Stock levels were now further in line with demand, while more buyers had been priced out of the market.

The lack of overseas and interstate migration into Melbourne due to lockdowns and hurdles to international travel had also caused demand to soften.

In dollar value terms, he said the difference between house and unit values had stretched wider than ever across the nation.

Capital city houses across were now 37.9 per cent more expensive than units — the largest difference on record, according to the report.

Melbourne house values skyrocketed 19.5 per cent in the past year, while unit values increased by just 9 per cent.

“With such a large value gap between the broad housing types, it’s no wonder we are seeing demand gradually transition towards higher density housing options simply because they are substantially more affordable than buying a house,” Mr Lawless said.

Mr Lawless said the slower rate of price growth would come as a relief to cash-strapped buyers.

Victoria is in the midst of its biggest auction month on record, according to the Real Estate Institute of Victoria.

An unprecedented 2000-plus auctions are scheduled to take place each week for three consecutive weeks.

Mr Lawless said this meant buyers had more choice of listings and sellers had to be “more realistic” about their price expectations.

“For buyers this is good news. It’s probably not as good as if property prices were falling, but clearly some heat’s coming out of the market,” Mr Lawless said.

“I think that puts them in a much better position to negotiate a little bit more, to deliberate on their purchasing decision more than what they might have been able to in the past.

“I think this trend will continue (next year) to softening price growth. I don’t think we’ll see values moving into negative growth, at least on an annual basis by the end of next year.”

Unit rents in Melbourne have also grown at a faster pace than house rents over four of the past five months.

This put the city at odds with much of the country, where house rents generally recorded a faster rate of growth than units, according to the report.

“Melbourne’s unit sector was previously recording the weakest rental conditions of any capital city, with rents plunging -8.5 per cent between March 2020 and May 2021,” Mr Lawless said.

“It seems that more tenants are taking advantage of the renewed affordability of unit rentals, especially across inner city precincts where rents had previously fallen sharply.”

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Originally published as Melbourne property value growth cools amid massive listings surge

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