Melbourne continues to record some of the weakest conditions in the Australian real estate market, particularly in the high price segment
Tougher lending criteria are still hitting Melbourne hard and the city, like Sydney, is facing a monthly decline in real estate prices.
Since November 2019, the CoreLogic Hedonic Home Value Index indicates that values ​​in Melbourne have fallen by a minimum of 1% per month since November 2018. In addition, the decline rate has increased relative to in the January 2019 quarter, prices fell 4% overall. As a result, prices in Melbourne fell back to levels reached two years ago.
The decline was particularly marked in the upper part of the market, as the properties of the top quartile saw their values ​​fall by 12.4% compared to January 2019.
"Tighter bank credit standards and tighter credit controls are preventing borrowers from accessing the same level of funding as before," says Geof Snell, BIS's leading property economist Oxford Economics . These factors are expected to further reduce purchases in 2019.
Population growth generates rental demand
Even with the very low rental yields in Melbourne – among the lowest in the country – demand continues to fuel the city's rental market due to recent population growth due to foreign and interstate migration. As a result, competition remains strong. Rental income is likely to improve with lower sales.
Ongoing infrastructure projects in the Melbourne Metro could help maintain the interest generated by job creation, which could increase the population. These projects include road and rail works, which should improve accessibility.
In addition, the month of February 2019 of Herron Todd White offers an optimistic view of what is waiting for the pockets of Melbourne. For example, the ports of Melbourne and South Yarra are expected to stabilize slightly in the second half of 2019. However, we expect a decline in the housing market in the city center, with the construction of new apartments on plan that could jeopardize the offer. above the demand.
Meanwhile, buyers should expect the market to remain low for a while as the credit environment remains tightly controlled.
"I think that Melbourne and Sydney are strongly affected by this environment, especially since they often have very active investor segments. Price growth may not return until financial means are more readily available, "said Charles Tarbey, president and owner of Century 21.
SUBURB TO MONITOR
CLARINDA: Descent in the suburbs of Melbourne
Melbourne's economic slowdown continues to affect surrounding regions. The housing market in the suburbs of Clarinda, for example, suffered a drop in value for the first time since 2014.
Located just 19 km southeast of Melbourne's central business district, this multicultural suburb has residents from India, Greece, and Southeast Asia. Over the years, housing values ​​have shown strong growth. However, the recent change in the real estate market resulted in a 12-month decline until January 2019, when house prices fell by 9.6% and unit values ​​by 5.6%.
Nevertheless, apartment rental rates rose 5% to an average of $ 420 a week from November 2018
Culture: Clarinda is a melting pot of Asian and Mediterranean cultures
Housing Market: Clarinda reported a drop in real estate prices for the first time in five years
Can you afford to buy in this suburb? Find out how much you can borrow
Top suburbs:
Homebush
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Dulwich Hill
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month-end
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tank
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