Things are down in the metro, but regional towns around the capital are showing signs of strength
Melbourne’s rate of decline could go into double digits soon the way things are going, as the downturn doesn’t seem to be letting up.
“If Melbourne’s downturn continues at a similar pace we are likely to see the annual decline move into double-digit falls over the coming months as well, with values currently 9.1% lower over the year,” says CoreLogic head of research Tim Lawless in CoreLogic’s Hedonic Home Value Index report for March 2019.
“The February housing market results marked a subtle improvement in the rate of decline, however the housing market downturn is now more widespread geographically and we aren’t seeing any indicators pointing to the market bottoming out just yet.”
However, what Melbourne does have going for it is consistent population growth, which continues to create demand particularly from interstate migrants. In particular, the larger cities and towns around the capital are drawing a great deal of interest, due to their convenience, relative affordability, public transport hubs and atmosphere.
“Potential upside may exist in some regional areas which offer an affordable escape from capital city markets which have recently experienced strong price growth,” says Geof Snell, principal property economist at BIS Oxford Economics.
As a result, these areas are among the best-performing regional districts in the country – in contrast to Sydney, where regional pockets like Newcastle and Illawarra are struggling.
Low supply keeps Melbourne grounded
With demand largely staying on track, supply has been just low enough to keep buyers, especially owner-occupiers, competing.
“With investors retreating from the market, the best performance for prices is expected to be those markets where owner-occupiers have a bigger influence,” Snell says.
“NSW and Victoria have both experienced extended periods of undersupply and, despite record dwelling commencements over the past few years, we are forecasting that these markets will both remain in a situation of undersupply over the coming four years.”
To balance out existing and expected demand, Victoria needs to continue releasing new homes into the market.
Meanwhile, even though the Melbourne market is anticipated to see further decline during this period of downturn, the demand-supply situation could continue to keep it from sliding too far down.
SUBURB TO WATCH
DINGLEY VILLAGE: Activity is winding down
Growth in the suburb of Dingley Village, situated 22km south of the Melbourne CBD, has begun to wind down in the year to February 2019 after a strong run over the past decade.
House prices plummeted by 13.1% in this period to a median value below $800,000. Meanwhile, unit values dropped by 3.6% for the first time since 2014, ending a long streak of double-digit growth.
Originally named Dingley, this suburb houses a large community, with schools and sports facilities making it a good choice for families. Dingley Primary School, Kingswood Primary School and St Mark’s Primary School are all located here.
Amenities: Dingley Village is home to several schools and sports facilities
Growth: Both house and unit values fell in the year to February 2019