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In the past financial year, the property value of all residential properties in Melbourne has increased by 7.7%, the lowest increase of any capital.Image: Daniel Packett
New data shows that the value of houses and units in Melbourne increased at the slowest rate in each capital city in the last financial year.
Experts say that the slowdown in the US real estate market is now “obvious.”
CoreLogic’s latest Hedonic Home Value Index shows that in the year ended June 30, the value of all residential properties in Melbourne increased by 7.7%.
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![Stock Images-Housing](data:image/svg+xml,%3Csvg xmlns="http://www.w3.org/2000/svg" viewBox="0 0 1280 720"%3E%3C/svg%3E)
According to CoreLogic data, the median price of all houses and units in the city is now $753,100.Image: Daniel Packett
House prices in the Melbourne metropolis have risen by 1.8% in the past month and by 8.9% in the past 12 months.
Unit growth has been even slower, with values rising at a modest 0.7% in June and 4.7% for the entire fiscal year.
The median property value of all residential properties in Melbourne is now $753,100, while the median value of detached houses is $929,769 and the median value of units is $610,043.
CoreLogic research director Tim Lawless said the city’s lockdown was a major factor in the slowdown in Melbourne’s residential value growth.
He said that during the peak of the Covid-19 crisis last year, house prices fell by 5.6%, but they have rebounded by 11.5% since the market bottomed out.
Tightening of bank lending and rising mortgage interest rates are expected to lead to a slowdown in real estate price growth.Image: Sarah Mattley
Although the prolonged lockdown has inhibited the growth of overall real estate values, he said that Melbourne house prices are growing by 8.9% annually, which means that affordability is more important than ever.
“We have not seen income growth so fast. So, this does mean that the affordability of housing prices as measured by income has deteriorated,” Mr. Lawless said.
CoreLogic’s national research director Eliza Owen said that low mortgage interest rates continue to drive strong buyer demand, while low inventory levels create a “sense of urgency” among buyers.
Although Melbourne’s real estate value has grown modestly compared to other cities, affordability remains an issue.
The national advertising inventory level in June was still 24.4% lower than the five-year average.
According to the report, affordability factors, the possibility of banks tightening loans, and rising mortgage interest rates have begun to dispel the heat in the national real estate market.
The report states: “Even without the latest development of Covid-19 in Australia, with the intensification of affordability constraints, the real estate market is clearly losing momentum.”
“As of June, several major banks have predicted that the cash rate will increase earlier than the Reserve Bank of Australia previously stated. The earlier-than-expected cash rate will lead to an increase in mortgage interest rates and reduce the demand for credit.”
According to Tim Lawless, head of research at CoreLogic, the growth of real estate values still exceeds the growth of household wages.
Mr. Lawless said that market relaxation would be a good thing for buyers with tight funds.
Inventory levels will further align with demand as more and more buyers are excluded and suppliers continue to list their properties for sale.
He said this will provide more influence to the remaining buyers.
“I think we will start to see the number of listings normalize next year,” Mr. Lawless said.
“This will return the right to negotiate to the buyer.”
In this fiscal year, Darwin’s real estate value has grown at an annual rate of 21%, the highest among all capital cities.
Hobart had the second highest annual growth rate, where house prices rose by 19.6%.
In the past year, Melbourne’s transaction volume ranked second in the country, with sales of 89,234 transactions.
Sydney has the largest annual sales volume with 110,064 transactions.
National sales are approximately 582,900, which is the largest annual sales since February 2004.
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