REIV: Covid-19 era property price boom saves Melbourne homes from 2024 wipe-out

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12 Matthew St, McCrae - for herald sun real estate

12 Matthew St, McCrae, recently sold for $4.125m. The address last changed hands for $880,000 in 2017.

The extraordinary growth of Melbourne’s Covid-era property boom is shielding homeowners from a brutal market correction that has wiped six figures from some suburbs in three months.

The Real Estate Institute of Victoria’s latest quarterly medians data has revealed more than 300 of the city’s suburbs’s house prices remain at least $100,000 ahead of where they were in 2019 — despite home values falling in 203 areas since the end of June.

Only Carlton North has lost ground since the pandemic reached Melbourne, with the inner Melbourne suburb’s typical house price currently $9250 below where it was in September 2019.

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Meanwhile, Caulfield’s $2.2m median house price is more than $850,000 higher than it was before the pandemic, despite dropping almost $700,000 (24 per cent) in the past three months.

Even affordable areas are still six-figures ahead, with Fawkner, where the median has fallen from $790,000 to $755,000 since July, up a hefty $102,000 compared to 2019.

Craigieburn’s $653,000 median house price is up by $113,000, even though it dropped $12,000 in the past quarter.

Similarly, while unit values fell in 116 suburbs from July to October, only 28 metropolitan areas were behind where they were in spring 2019, according to the data.

9 Chloris Cres, Caulfield - for herald sun real estate

9 Chloris Cres, Caulfield, sold for $2.95m in December, but the suburb has since taken a hit with the median price falling in the past three months, though still ahead of the pandemic era.

Ashwood has recorded the biggest jump, with a $413,500 increase over the past five years bringing the typical unit price to $1.44m at the end of September.

It’s one of 82 suburbs that is still six-figures above its pre-pandemic level, including Noble Park, currently home to a $540,000 median unit price that’s down from $590,000 three months ago.

REIV president Jacob Caine said Melbourne’s housing market had demonstrated extraordinary resilience during the pandemic and to a series of blows that had followed.

While home values were beginning to fall now, Mr Caine said it had taken multiple hits to the market including rising interest rates, changes to land tax, changes to the state’s rental minimum standards and a cost-of-living crisis to cause the backward step.

Jacob Caine from Caine Real Estate, REIV President - for herald sun real estate

REIV president Jacob Caine said Melbourne home prices were well placed to resume growing in the not too distant future.

“But the fundamentals haven’t changed, this is still one of the best cities in the world,” he said.

Melbourne’s improving affordability compared to Brisbane and other capitals was also likely to make it more attractive with investors as other state governments began to implement more tenant-friendly policies around the country.

Combined with interest rate cuts expected in the coming few months, Mr Caine said he was confident it was very likely Melbourne home prices would soon be back to rising.

Jellis Craig Fitzroy’s David Sanguinedo said the Carlton North market had received an influx of investment properties being listed by owners who had held onto them for long periods and had brought forward plans to sell from across the next decade as changes to rental rules and taxes had left them seeing slim possibilities of further capital gains.

82 Princes St, Carlton North - for herald sun real estate

82 Princes St, Carlton North, recently sold and showcases the kind of period features that many buyers are still willing to pursue.

With a greater number of more affordable homes being listed, Mr Sanguinedo said it was unsurprising to see the median had come down — but noted that it did not necessarily reflect a reduction in all home prices in the suburb.

“It has had a little heat come out of it, but it was a very strong market before — so homes are still getting strong results,” he said.