Melbourne home price recovery could take until 2025, values stall in July: PropTrack
It could take years for the city to fully recover from the home price hit that has accompanied interest rate hikes, as new PropTrack figures show growth for houses and units stalled.
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Melbourne’s property market recovery stalled in July and the city is now not expected to regain all the ground lost to rising interest rates until at least next year.
But a leading economist has flagged it is “entirely possible” a second interest rate pause expected from the Reserve Bank will mark the end of the hiking cycle that has hammered household budgets.
The city’s typical house lost about $640 (0.07 per cent) across July, falling to $910,000.
It remains down about $13,500 (1.41 per cent) from the same time a year ago, and $50,000 below its peak in March, 2022.
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However, a slow recovery has put it $10,000 (0.89 per cent) above where it bottomed out in December last year, according the latest PropTrack Home Price Index.
The city’s $617,000 median unit value rose about $3000 (0.49 per cent) in the past month and is now about $12,500 ahead of its lowest ebb in January this year.
But it is still $3850 below where it was a year ago and more than $26,000 short of its December 2021 benchmark.
PropTrack senior economist Eleanor Creagh said with a rate pause expected it was “entirely possible” that would signal the end of the current rate hiking cycle.
“The end of the tightening cycle would continue to sustain current confidence and sustain price rises we are currently seeing, but in terms of future growth listing numbers will be one of the key factors there,” Ms Creagh said.
However, she warned even if buyers outnumber sellers in spring it was not likely Melbourne would regain all of its lost ground until at least next year, based on recent value growth.
“Melbourne could even be 2025,” Ms Creagh said.
Across the rest of Victoria the median house price fell about $2500 (0.4 per cent) in July, while the typical $444,000 unit declined a marginal $267 (0.06 per cent).
The data also shows Melbourne’s inner eastern suburbs are making the city’s most rapid turnaround, with their typical home rising about $41,500 (3.03 per cent) in the past year.
Property Mavens founder and buyer’s advocate Miriam Sandkuhler said that growth likely reflected a two-speed market operating across the city, with larger units suited to downsizers and family homes in higher end areas doing well.
First-home buyers and those needing a larger mortgage to buy their next home were less likely to drive strong results, tempering the speed of growth.
Those looking for value for money could consider more affordable homes in West Footscray, Maidstone and Maribyrnong, Ms Sandkuhler advised.
Ray White Victorian chief executive Stephen Dullens said while there could be more listings in spring, about 38,000 buyers inspected homes through his firm’s offices around the state in July, up from 27,000 in June.
With buyer numbers seemingly rising, Mr Dullens said Melbourne could recover sooner than PropTrack’s projections — but agreed listing numbers would be pivotal.
“I wouldn’t think that it would take to 2025, but to me the market feels very healthy at the moment,” he said.
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