Sydney may have been the first of the two cities to get back on top in 2019, but Melbourne could begin the new year as the best-performing capital city market.
According to the CoreLogic Home Value Index for October 2019, Melbourne recorded its greatest month-on-month gain since November 2009, with property prices rising by 2.3% between September and October.
“The housing market rebound is gathering pace, both geographically and across the broad valuation cohorts, off the back of lower mortgage rates and improved access to credit, as well as an improvement in affordability relative to the market peak several years ago and consistently high demand via population growth,” says Tim Lawless, head of research at CoreLogic.
“Demand for housing is responding to stimulus measures, including mortgage rates that are now lower than anything we have seen since the 1950s and improved mortgage serviceability tests following APRA’s decision to adjust the minimum interest rate serviceability rules in July 2019.”
Melbourne has certainly sustained demand as a result of population growth, its stable economy and job market, which has helped to cushion the city through its decline. With that period now over, the inner-city suburbs of Melbourne have rebounded, reporting the highest levels of growth of all capital city subregions.
With dwelling values on the up again, those who want to own a home may be looking to the unit market for affordable options. The People’s Choice Credit Union identified a number of suburbs in its People’s Choice of Housing report that represented the most affordable and liveable unit markets. Pockets like Hawthorn East, Murrumbeena, Surrey Hills and Glen Iris topped the list given their convenient locations near cities, job availability, low crime rates and accessibility via public transport.
Limited supply is expected to keep demand strong, especially in the rental market. According to OpenCorp director Matthew Lewison, “Melbourne has a lower vacancy rate so is likely to see evidence of a shortage before Sydney”.
Nonetheless, downsizers who have been waiting for Melbourne to kick back up could play a part in slowing down its growth again. Lewison notes.
“Suburbs with a high proportion of baby boomers are likely to experience a higher turnover of properties as a whole generation of homeowners look to cash in their $1m-plus properties to downsize.”
SUBURB TO WATCH
MORDIALLOC:Property prices in recovery
Dwelling values of both houses and units in the premium suburb of Mordialloc, located on the shores of Mordialloc Beach about an hour from the Melbourne CBD, climbed back up as 2019 closed.
House prices nearly slipped below $1m over the 12 months to October 2019, but with Melbourne bouncing back in the latter half of the year, they have shot back up to a median of over $1.1m. The median unit price is just under $650,000.
The average rental rate for units increased by 2.4% over the same period to $420 per week, while house rents held at $550. Rental yields remain rather low at around 3%, but this suburb has strong growth potential.
Rent: The rental rate for units increased to $420 a week – a 2.4% boost
Prices: The median house value rose to more than $1,1m in the year to October 2019