Multiple months of rising home values are pushing Melbourne’s property market out of the doldrums.
Melbourne is just behind Adelaide as the nation’s best capital for home price growth, as a fourth straight month of rising values pushes its ailing property market into recovery mode.
PropTrack’s latest Home Price Index shows the city’s $900,000 typical house has risen almost $9000 (1 per cent) so far this year, while the $588,000 median priced unit gained almost $12,000 (2.1 per cent).
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While it is not enough to outweigh losses in the Victorian capital across last year, with house values down from $917,000 a year ago and units behind from $594,000, senior economist Anne Flaherty said it was “an extremely strong result for Melbourne”.
“For a long time we have been trying to figure out when Melbourne will start its comeback and the fact that we have seen home values increase every month this year, that’s a really good sign that we are starting to see that recovery,” Mr Flaherty said.
The growth might also have staved off Perth overtaking the Victorian capital’s median dwelling price, an amalgamation of unit and house values, with the real estate research group’s data showing the Western Australian city is just $2000 short — but now recording slower growth.
Sydney, Brisbane, Canberra and Adelaide are all currently ahead of Melbourne based on median dwelling values, making the Victorian capital one of the most affordable cities nationwide, though a higher proportion of units than other major cities does skew the figures down.
2/67 Dover Street, Flemington has just hit the market with a $900,000-$990,000 price guide. Melbourne’s typical house price is now $900k, according to the latest PropTrack Home Price Index.
While the economist said the city should be recording annual growth before the end of the year on current trends, a full recovery to when the market last peaked in 2022 is not expected to occur until next year.
Houses are currently 4.2 per cent short of their peak in Melbourne, an improvement from December when they were 5.1 per cent off the pace, while units are just 3.6 per cent away from reaching record levels, a significant improvement from the 5.6 per cent deficit they recorded at the end of 2024.
“Units are definitely seeing the best recovery,” Ms Flaherty said.
The economist said this was likely due to their relative affordability, and with many of those being sold today attracting prices lower than what would be possible with contemporary construction costs, it was likely they would continue to gain value.
Source: PropTrack
Barry Plant head of growth Mark Lynch said his firm — one of the largest real estate agency groups in Victoria — was “certainly seeing signs of a recovery in the market”.
Mr Lynch said there was particularly high demand for homes under $1m, with areas around Noble Park and Keysborough among the most heated in that bracket.
While there had been a rise in demand from buyer’s advocates purchasing on behalf of Sydney-based investors, the agent said the one of the biggest groups driving home sales was first-home buyers.
241 Heatherhill Road, Frankston just went under offer for $900,000 — the typical price for a Melbourne house right now.
“That first-home buyer market is looking very strong at the moment,” Mr Lynch said.
“They are at the point where they are saying, it’s not going down and that now is the time to dig in and have a really good look.”
With his own daughter among them, he added that units appeared to be particularly popular as those who have been saving up commit to what they can afford.
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nathan.mawby@news.com.au
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