Is Victoria’s real estate boom over?Suburbs and towns where house prices have fallen from their peak
Victorian property prices are stalling after a Covid-driven property frenzy. So, is our real estate boom over, or just off the boil?
Property
Don't miss out on the headlines from Property. Followed categories will be added to My News.
Victoria is on the verge of a buyers’ market as property prices stall after a Covid-driven property frenzy.
House prices in more than 100 suburbs and towns have fallen, offering desperate house hunters the first glimpse of a better look in.
Melbourne suburbs that led the Covid boom are now leading the price falls, as rocketing citywide price growth stalls and auctioneers catch their breath.
RELATED: The next Melbourne suburbs tipped to boom
Can’t buy a house? Here’s the next best thing
Where Victoria’s happiest sellers live
After soaring through the pandemic as families upgraded and shifted lifestyles, Research’s median house price fell 15.95 per cent from its September peak to $1.37m at the end of February, Tyabb’s median dropped 13.29 per cent from its July high point to $897,500, and Middle Park’s, 10.66 per cent from January to $2.89m, based on monthly sales figures.
Melbourne’s median house price rose just 0.2 per cent over the three months to March but 13.3 per cent annually to $925,000, while units slipped 0.3 per cent over that quarter and a more meagre 3.2 per cent 12-month gain to $623,000, according to REA Group’s PropTrack.
Advantage Property Consulting director Frank Valentic — seen each year on The Block as a buyer’s advocate — said clearance rates around 75 per cent reflected a more balanced market than the boom “where they were at 85 per cent”.
“We’re just coming from more of a sellers’ market, to a market where buyers have more opportunities,” Mr Valentic said.
“There are less buyers for each property now.”
He said “good-quality, well-located properties” continued to perform strongly as “run-of-the-mill properties” began to “feel the pinch as we go into a buyers’ market”.
Mr Valentic expected inner suburbs like Elwood, Fitzroy and Carlton to peak first before the cooldown rippled to the outer suburbs within the next 6-12 months.
PropTrack head of economic research Cameron Kusher said buyers planning on switching for more space in outer Melbourne or regional living had likely already done so, reducing red-hot demand.
“It looks like there won’t be a lockdown again, more things are opening up, people that were going to do those things have already done that,” Mr Kusher said.
“The biggest trend for me in Victoria is there’s quite a lot of premium suburbs (among the prices falls). Some of those prices people were paying for top-end stock, they’re just not quite as prepared to pay anymore.
“They’ve got other things to spend money on other than a house, like trips overseas, going to the pub and the footy, they’re putting less of their income towards housing.”
Cate Bakos Property’s eponymous owner and buyer’s advocate said price growth was “really hard to track” last year because the market was so hectic and “we were setting records basically every Saturday”.
“It’s still a sellers’ market, but instead of 10 bidders it might be two or three and, in addition, properties are passing in now — we just didn’t have pass ins last year,” Ms Bakos said.
“And buyers were very forgiving of B-grade properties because of the sheer desperation, but right now they’re not forgiving of B-grade properties”.
Knockout offers often “$100,000 or more” beyond her limit — which included a 2 per cent stretch in a hot market — reflected “a very hot … almost irrational market” last year.
Ms Bakos said bidders were now “a bit coy” and properties were selling after auction.
“The challenge for buyers right now is many are a little bit cautious and jittery because of global events and talk of interest rate rises, when the reality is there are slightly eased market conditions and if they’re thinking of buying now it is a great time while the opportunity is abundant and the ease of getting a property is a little better.”
Mr Kusher expected the rate of price growth to continue to slow in Melbourne and regional Victoria, but less so in country areas.
“Towards the end of the year we might see some moderate price falls (overall) in Melbourne, with the heat coming out of the market and some talk of interest rate hikes,” he said.
“The regional market is probably going to slow as well.
“The pull to regional Victoria is not going to be as strong now that Melbourne is back open and things are returning to something resembling normal.”
Mr Kusher said regional Victoria would continue to be boosted by its relative affordability with parts “very commutable” to the city, especially for just a few days a week.
And more affordable suburbs with slipping prices had previously been boosted by government incentives to buy and build, including HomeBuilder, that were no longer a driver.
Essendon couple Leah Moriarty and Edyn Sibbald, 25, are ready to strike on their first home after Covid-19 lockdowns and living at home helped fast-track their savings goals.
“I was renting a few years ago but moved back home, it was just not going to be viable to rent and to save for a deposit at the same time,” Mr Sibbald said.
Ms Moriarty said lockdown “helped a lot” as they ramped up their homebuying plans.
“Less going out and spending money on nights out and dinners and catching up with friends and holidays was the main one as well, so saving money was easy to do while being locked down — it was one of the good things to come out of lockdown,” she said.
Ms Moriarty, an account manager at a media agency, and Mr Sibbald, a project management consultant, are hoping to buy a two- or three-bedroom house in Essendon, but are also considering townhouses, and are shooting for a win at auction this weekend.
“Our goal was always to save up to achieve that big goal of buying our first home, which is something we’re both looking forward to when the time does come,” Ms Moriarty said.
“We’ve always said if it’s meant to be, it will be, so while we’ve been a little bit disappointed (missing out), we know it will all make sense when the dream home is eventually ours’.”
MELBOURNE
Property type, median price, three-month change, annual change
House, $925,000, +0.2%, +13.3%
Unit, $623,000, -0.3%, +3.2%
Combined, $810,250, +0.1%, +11.1%
REGIONAL VICTORIA
Property type, median price, three-month change, annual change
House, $610,000, +2.9%, +25.2%
Unit, $415,000, +1.5%, +11.7%
Combined, $585,000, +2.8%, +24.1%
Source: PropTrack
Sign up to the Herald Sun Weekly Real Estate Update. Click here to get the latest Victorian property market news delivered direct to your inbox.
MORE: Shaun Atley: Retired Kangaroos defender lists in Moonee Ponds
147-year-old Italianate mansion built for Lord Mayor of Melbourne up for grabs
Tower on the Terrace: Richmond pad with city views hits the market
Revealed: Real reason behind Coast’s record property prices
The supply of new Gold Coast units on the market has plummeted, with a report warning the crunch on the property sector has worsened in the past 18-months.
First look: $700m twin towers for landmark Surfers Paradise site
Plans for a $700m twin tower mega development have been unveiled for a site in the heart of Surfers Paradise. FIND OUT MORE