The housing market of Melbourne is not what it used be during the height of the pandemic, with green shoots signalling its reinvigoration and potential recovery from the slump.
McGrath Estate Agents CEO John McGrath said Melbourne, while still softening Sydney, there are signs that paint a stronger outlook for the city’s property market over the months to come.
“Melbourne is pulling out all the stops to reinvigorate its CBD in the wake of the pandemic,” he said.
Some of the major infrastructure investments in the Melbourne market are the following:
- $1.7bn transformation of the arts precinct in Southbank
- Proposed High Line-style revitalisation of the banks of the Yarra River (projected to contribute $1bn into the economy)
- Completion of five new train stations as part of the Metro Tunnel (due to be completed in 2025)
“Historically, international buyers have been an important cohort of the property market in Melbourne. And they’re coming back,” Mr McGrath said.
In fact, the number of foreign buyers in Victoria’s established housing market increased significantly to 5.1% over the second quarter of the year, up from 3.1% in the 2021 December quarter.
The closing of borders amid the pandemic affected Melbourne the most compared to other capital cities.
Melbourne’s house prices have declined 7.1% so far over the year to 2022 while apartment values are down 3.9%.
All 385 suburbs in Melbourne reported a fall in house prices, while 88% of the markets recorded a decline in apartment prices.
“But it’s a different story in Victorian regional areas, where continued demand from city dwellers relocating for a sea-change or tree-change is keeping values strong,” Mr McGrath said.
“During the property boom, the median house price in regional Victoria rose by 50% over the two years to March 31, 2022 — it was an absolutely extraordinary time for Victorian coast and country homeowners.”
Geelong, the state’s most populous regional town, is one of the strongest markets over the regions, benefitting from a 10-year plan for revitalisation.
The plan, which started in 2019, is set to deliver $502m in investment to the town, including the redevelopment of the Geelong train station, the construction of the Queenscliff Ferry Terminal and the redevelopment of the Twelve Apostles precinct.
Mr McGrath said one of the challenges for Victoria and Melbourne would be the rising interest rates.
“Rising interest rates are, of course, having an impact on the Melbourne market, but this should be viewed alongside a strong economy, low unemployment, and a steadily increasing flow of migrants returning to Australia,” he said.
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