Melbourne apartment prices outpacing houses in August — PropTrack Home Price Index
Melbourne tenants desperate for housing security have kicked a unit-price recovery into high gear with the city’s smallest homes now outpacing houses.
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Melbourne tenants desperate for housing security have kicked a unit-price recovery into high gear with the city’s smallest homes now outpacing houses.
PropTrack’s Home Price Index released Friday shows a $617,000 typical unit gained about $3250 (0.53 per cent) in August.
It’s now climbed close to $16,000 (2.61 per cent) from when prices for townhouses, apartments and flats bottomed out, though is still $23,000 (3.62 per cent) below the peak.
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By contrast, the city’s $911,000 median house price rose a more modest $920 (0.09 per cent) in August and remains $46,000 (4.82 per cent) short of its previous high water market.
House prices are up just under $11,000 (1.19 per cent) from the market’s lowest ebb earlier in the year.
PropTrack economist Eleanor Creagh said the surge in unit prices was in part because house values had soared significantly higher as homebuyers sought space during and immediately after lockdowns in 2020 and 2021.
“And given the relative discount, units are in a better position given mortgage serviceability costs,” Ms Creagh said.
She added that with the likelihood interest rates had now peaked, it was probable this spring would be a lot busier than last year’s — with the number of homes hitting the market already up compared to 2022 and a more than 1000-auction record start to September forecast this weekend.
Despite this, she estimated a sustained recovery in Melbourne could take until 2026 to bring prices back to their last peak.
Amy Lunardi Property founder Amy Lunardi said the modest increase coincided with a rise in interest from buyers that first began in July and had begun to convert into purchases in August.
Ms Lunardi added that she wasn’t to see units outperforming houses at the moment, as she increasingly encountered tenants desperate for housing security opting to buy a unit they could afford rather than continue renting until they could afford to buy a house.
“And I’m seeing buyers who may have previously considered something a little bit larger now having to consider a unit because of their borrowing capacity,” she added.
The buyer’s advocate said continued modest price rises were likely this year, but prices could jump more rapidly if there was an interest-rate cut.
Price gains were more likely for units that were in smaller complexes with lower owners corporation fees, while those in larger complexes that had previously been investments were “sitting around a little bit longer”.
Mitch and Corinne Pryor watched the property market intently in August as they prepared to auction their 14 Glenview Place, Lysterfield, home last night.
After the electrician and his interior-design savvy partner renovated the property, Mr Pryor said he had definitely seen signs things were on the up with strong interest in the home.
They’ve also been looking to buy and missed out on a Mitcham home by $500 at an auction last weekend after it sold for $1,255,500 despite being called on the market at $1.1m.
Mr Pryor said he was already $100,000 past his point of comfort at that stage, but was still happy to see the price so high as it was “comforting” ahead of their own auction last night.
“It definitely reflects what’s been happening with the Reserve Bank having paused rate hikes,” Mr Pryor said.
“I’ve had the sense that the market is on the way up, but how far? Who knows.”
While the family enjoy renovating and are looking for a new project, they’re also conscious the sale will help to “alleviate cost of living pressures”.
The home was listed with Ray White Ferntree Gully’s Ben Thomas.
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