Melbourne’s house and unit prices hit another record high but will they keep rising?
Melbourne’s median house price has surged further beyond $1 million, despite the city being locked down – and the real estate market largely closed – for 90 days in the third quarter of 2021.
According to the latest Domain House Price Report, the median house price of the world’s most locked down city edged up by 1.6 per cent to a record-breaking $1,037,923 in the three months to September.
Annually, Melbourne’s house prices are up 16.8 per cent, rising by nearly $150,000 in just 12 months.
Similarly, unit prices across the city also continued on a record-breaking upward trajectory, with the median price now sitting at $576,879 (up 6.1 per cent year-on-year).
However, while real estate in Victoria’s capital as a whole continued to grow more valuable, the median house price was lifted mainly by strong quarterly growth in two regions: the outer east and north east.
Six out of Melbourne’s nine Greater Capital City Statistical Areas (GCCAS) actually saw a fall in the median house and unit prices.
Felicity Emmett, senior economist at ANZ, said this contradiction could be an indication Melbourne’s real estate market was beginning to slow down.
“I think we are starting to see some signs of cooling in the market,” Ms Emmett said.
“If we look at some measures like the number of days a property stays on the market, that’s been rising the last few months, which suggests that there’s less urgency on the part of buyers to grab something while they can.”
But the notion of a softening market was not concrete, according to Barry Plant executive director Mike McCarthy, who attributed the dip to the disruption caused by Melbourne’s most recent and second-longest lockdown.
“We had something like 640 or 650 sales across our group in both August and September, and a lot of those sales were clearly done with only a virtual inspection because you physically couldn’t inspect a property during that time because of the lockdown,” Mr McCarthy said.
“Those numbers are only around 60 per cent of what we had budgeted for during that time. A lot of sales weren’t happening, and that’s likely to skew the median price.
“There’s no doubt it’s distorted the market because, clearly, only a relatively small percentage of people are prepared to buy a property with a virtual inspection as opposed to physically seeing it.”
With the lockdown now over and real estate agents able to host in-person inspections and auctions once again, Melbourne’s property market is showing signs of heating up at a rapid rate.
In the four weeks to October 17, Domain’s data shows Melbourne’s property listings have increased by a whopping 118.5 per cent, while the clearance rate from last week’s round of auctions sat at an impressive 76.3 per cent from 748 reported results.
Stephen Dullens, chief executive of Ray White Victoria and Tasmania, said the final quarter of 2021 could see housing prices reach even greater heights.
“The number of new listings coming online at the moment is just massive – we’ve never listed anywhere near what we’re listing at the moment,” Mr Dullens said.
“Our clearance rate last week was 89 per cent, which was 100 per cent of our auctions [that were conducted]. So, all the signs are things are really, really strong, and when clearance rates are at that level, it tends to put upwards pressure on prices.”
This recent surge in Melbourne’s real estate market is something that Leon Handel and his family know all too well.
Mr Handel recently sold his family’s St Kilda home just six days after the first in-person inspection was held, for more than $150,000 above the top end of the $2.4 million asking range.
“We only had three open days for the house, and from there, it was just a process of negotiation between two parties, and then it was a done deal,” Mr Handel said.
“We were surprised at how quickly it sold – we thought it would take a bit longer. But Melbourne has a habit of coming back with quite a bit of gusto from lockdowns.”
Ref: JAMES ROBINSON (on 28 Oct 2021). Melbourne’s house and unit prices hit another record high but will they keep rising?. Retrieved from https://www.domain.com.au/news/melbournes-real-estate-market-set-new-records-for-the-september-quarter-1098777/.
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