Melbourne’s housing market is days away from slumping to the nation’s sixth most affordable, cementing its decline as a nationa property market power.
Melbourne’s housing market is days away from becoming the nation’s undisputed sixth most affordable capital, and at risk of the country’s biggest losses from future rate hikes.
But with the lacklustre growth largely being placed at the feet of the Victorian government and one of the world’s most extensive lockdowns during the Covid pandemic, property experts are pointing out that the city has inadvertently become a haven for first-home buyers.
PropTrack data shows Melbourne’s median dwelling price tumbled below that of Perth and Adelaide in 2024, but it still hosted a higher median house price than the other cities.
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A dwelling price is an amalgamation of house and unit medians, with Melbourne’s skewing lower than most other capitals due to the prevalence of units in the city compared to others.
But after a nominally flat February, when the Victorian capital’s median house price rose just $2000 (0.2 per cent), the $1.012m median house price is now just barely above Adelaide’s $1.01m — and already below Perth’s $1.075m figure.
With the South Australian capital gaining $7000 (0.7 per cent) in the past month, it’s likely it will move ahead in a matter of days.
That would leave just Hobart and Darwin as home to more affordable median house prices, and cement the Victorian capital’s position in the cheap seats.
Until mid 2024, Melbourne was typically the nation’s second most expensive capital.
PropTrack senior economist Eleanor Creagh says lockdowns and government policies are factors in Melbourne home values underperforming other capitals. Picture: John Gass.
PropTrack senior economist Eleanor Creagh said Melbourne appeared to be “trailing at a relative discount compared to the major capitals”.
“Melbourne is still not the cheapest capital, but its discount compared to Brisbane and Adelaide is historically large,” Ms Creagh said.
The economist said a large part of the underperformance for the past five years was harsher lockdowns, changes to policies impacting property investment that had made the city less attractive — and a better supply of new homes than other states.
With Melbourne still home to high numbers of homes for sale compared to other capitals, its recovery appears “more fragile”.
“It could potentially be the case that a shift in market sentiment from further rate hikes bites more in Melbourne, but it is more affordable compared to other cities so borrowing capacity constraints won’t hit as much,” Ms Creagh said.
Real Estate Institute of Australia president Jacob Caine said while Melbourne’s housing market had stalled as a result of government taxes, policies and regulation, the city remained an enviable place for its amenities, cultural cache, incredible food offerings and transport.
Real Estate Institute of Australia president Jacob Caine says there are many metrics, including affordability, that Melbourne is still outperforming other cities.
“We haven’t recovered since the lockdowns in the covid years,” Mr Caine said.
“But the quality of life is fundamentally unchanged from pre-pandemic and in some respects there are very significant improvements.”
He said while the city was not attracting home price rises in keeping with other major capitals, it was providing better equality for homebuyers as a result.
“Fundamentally, I think that using price as the primary metric of success in the housing market is inherently flawed — we need to look at accessibility and affordability,” Mr Caine said.
He added that the quality of homes, as well as access to amenities and infrastructure would be increasingly important.
“By that measure, I think Melbourne, while sitting on a lower rung than other capitals for price, actually scores a lot higher,” Mr Caine said.
“And that’s a better thing for those struggling to get a foot on the property ladder.”
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