Melbourne home prices have recovered the value lost in the post-Covid downturn, reaching a new high in September.
New PropTrack Home Price Index figures confirm Melbourne’s home prices reached a new high in September, two and a half years after the last peak in March 2022.
Since then, the state government has hit the market with a series hikes on land tax and compliance costs to property investors that acted as a dampener on the housing market, with Brisbane, Perth and Adelaide overtaking Melbourne on median dwelling value.
The report reveals the .5 per cent growth for the month contributed to a 3.4 per cent annual rise.
This represents annual home price growth of $34,500 and pushed Melbourne’s median dwelling value – combining both houses and units – up to $839,000 in September.
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Melbourne’s median value for a house climbed 3.79 per cent in the year to $999,000, while 2.06 per cent annual growth pushed the city’s median unit value to $619,000.
PropTrack senior economist Eleanor Creagh said the housing market remains on a firm upward trajectory this spring.
“The combination of increased borrowing capacities and lower borrowing costs, stronger buyer
confidence and renewed competition is underpinning a broad uplift, while momentum is shifting,” Ms Creagh said.
Source: PropTrack
“Price growth in Sydney and Melbourne is re-accelerating, Hobart is rebounding, and Darwin is leading annual gains amid surging investor activity.
“While affordability pressures remain, this year’s series of interest rate cuts, improved sentiment, and the October expansion of the Home Guarantee Scheme, are expected to keep upward pressure on home prices in the months ahead,” Ms Creagh said.
“With stock on market constrained and new supply challenged, demand-side stimulus will intensify competition.”
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PropTrack senior economist Eleanor Creagh
Barry Plant chief executive officer Lisa Pennell said falling interest rates, widening of the First Home Guarantee for first-time buyers and better conditions for investors was increasing demand for homes across Melbourne.
“The active buying segments are predominantly first-home buyers followed by investors who are coming back into the market, particularly from interstate,” Ms Pennell said.
“First-home buyers are being driven by the incentive that’s on offer and investors are being driven by fact the market is so undercooked compared to the other states.
“It is undercooked because the legislation down here caused a lot of investors to leave the market – the compliance costs and obviously land taxes.
“That is now reversing because investors are seeing there is a huge opportunity for capital growth if they can sustain in that interim period.”
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Chari Emirzade and Barry Plant chief executive officer Lisa Pennell.
Ms Pennell said lower prices and higher rental yields were attracting investors to Victoria, despite the legislative costs.
“It’s always a supply and demand and a yield formula. The reality is in Victoria that because so many mum and dad investors have had to flee the market, that’s caused a pressure on rents for tenants because the vacancy rate is so low,” Ms Pennell said.
Ms Creagh said stretched affordability meant there was limited room for prices to surge.
The PropTrack report found Melbourne’s north-west region had the best growth within the metropolitan area, at 5.12 per cent, while annual growth was at least 5 per cent across northern Victoria’s north west, Shepparton and Bendigo regions, and Ballarat.
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