Melbourne house price falls speed up after huge pandemic growth

Melbourne’s median home price fell for the fourth straight month in June as the pace of decline ramps up after mammoth pandemic growth.

Victorian home prices are slipping after the mega gains of the Covid-19 lockdown era.

Melbourne’s median home price fell for the fourth straight month in June as the pace of decline ramps up after mammoth pandemic growth.

PropTrack’s latest Home Price Index shows the median property figure shed 0.61 per cent in June, and 1.8 per cent from its February 2022 peak, to now sit at $796,000.

Melbourne’s median house price slipped 0.66 per cent last month, now $907,000, and the median unit price, 0.34 per cent, now $605,000, according to PropTrack.

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The regional Victorian market is also stalling after incredible Covid-19 growth of a staggering 45.6 per cent from March 2020 to now. Its property median is $571,000.

Geelong’s median property price was 1.6 per cent down over the quarter, now at $757,000.

It comes amid uncertainty around rising interest rates, with the cash rate raised 0.5 per cent in June to follow a 0.25 per cent rise in May from its historic low.

PropTrack economist Paul Ryan noted the declines followed after an enormous surge over the past two years, with Melbourne’s overall median still up 19.4 per cent since March 2020.

“Buyer sentiment is down and that’s chiefly driven by this uncertainty about how high borrowing costs will go, and that’s already affecting markets like Melbourne because of the high price levels,” he said.

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PropTrack economist Paul Ryan.

“People are very reasonably not as confident taking out a really large mortgage under the current climate.”

Market expectations are factoring in another 3 per cent rise to the cash rate by March, but major lenders and PropTrack are less extreme at about a 2.25 per cent rate by Christmas.

PropTrack expects Melbourne prices to fall 10 per cent by the end of next year.

“It’s very clear that uncertainty that’s weighing on buyer sentiment is likely to persist this year and likely into next year and you can understand why buyers are less likely to go up to their limit in current conditions,” Mr Ryan said.

“But we’re not in that kind of downturn scenario yet, there are still lots of buyers in the market and lots of listings.”

It comes as NAB’s latest Residential Property Survey reveals the big bank is forecasting a 7.7 per cent decline this year, and 14.1 per cent next, to top 20 per cent, in Melbourne.

Independent economist Saul Eslake said he would not be surprised if prices fell more than 10 per cent on average across Australia — “and they might fall a bit more in Melbourne” — but he would be if they fell more than 20 per cent.

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Originally published as Melbourne house price falls speed up after huge pandemic growth