Melbourne home prices languish while other capital cities climb | PropTrack Home Price Index
Melbourne’s property market has stalled, with its median home value on track to be eclipsed by nearly every other capital city in Australia by 2025.
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Melbourne’s median house price has been overtaken by Brisbane for the first time in more than a decade, with Adelaide set to also eclipse the city if current price growth trends continue into 2025.
It comes as experts warn investors – faced with some of the highest property taxes in the country – are turning away from Victoria in droves.
PropTrack’s latest Home Price Index showed monthly and yearly growth for each capital city as of April, revealing a typical Brisbane abode cost $818,000 surpassing Melbourne for the first time since 2010.
Melbourne’s $805,000 median home price recorded annual growth of just 1.1 per cent, PropTrack revealed.
And analysis by the Herald Sun based on PropTrack’s data forecast for Adelaide and Perth standard property values could also eclipse Melbourne by 2025 if prices in those cities continued to see annual growth of 13.99 per cent and 20.16 per cent, respectively.
The property tax burden facing investors in Victoria has been labelled unwelcoming, Urban Development Institute of Australia (UDIA) Victoria chief executive Linda Allison said.
“We have some of the highest property taxes in the country,” Ms Allison said.
“It is possible that some parts of the market are looking elsewhere to invest in property because the conditions are just so tough in Victoria.”
She added that investor confidence was affected by higher taxes such as stamp duty, windfall gains tax, foreign investor surcharges as well as high interest rates.
“There’s actually a crisis of confidence for the consumer as well because with high interest rates and really not a lot of new projects on offer at the moment, it’s difficult for consumers to take that first step,” she said.
“Particularly for mum and dad investors, it is possible that they are looking elsewhere because the tax environment is more favourable.”
Nelson Alexander director Nicholas West said post-pandemic measures imposed by the Victorian government like the Covid debt repayment plan had rocked buyer confidence.
“We’ve had a lot of measures put in place in Victoria that no other state has had and that’s been impactful; there has been a Covid lag, there’s no doubt about that,” Mr West said.
But he predicted that once interest rates dropped, Melbourne would respond better than a lot of other states.
“There’s no way Melbourne will be on the low end of the median sale price moving forward as an international city with what we offer, no way in the world,” he said.
“I think we’ll come into a recovery phase where we’ll see the growth come back again.”
PropTrack economist Eleanor Creagh said property investors who were chasing capital growth as their main reason for investing may be deterred from buying in Melbourne.
How Much Aussie Homes Could Cost If Price Growth Trends Continue into 2025
Capital Cities - Median Home Value (April 2024) - Annual Growth (as of April 2024) - Forecast Median Home Value in April 2025
Sydney – $1.081m – 7.24% – $1.159m
Brisbane – $818,000 – 12.82% – $922,900
ACT – $836,000 – 2.10% – $853,500
Adelaide – $730,000 – 13.99% – $832,100
Perth – $678,000 – 20.16% – $814,700
Melbourne – $805,000 – 1.10% – $813,000
Hobart – $666,000 – -1.98% – $652,800
Darwin – $491,000 – 0.16% – $491,800
Source: PropTrack
She added that Adelaide, Perth and Brisbane had significant lack of stock for sale and strong buyer demand in the past year.
While every state was experiencing acute housing affordability issues, Real Estate Institute of Victoria president Jacob Caine said Victoria was still ahead of the pack when it came to delivering on the construction of new homes relative to the rest of the country.
“Our supply issues, while still acute, aren’t quite as bad and that is why we’re seeing much flatter property growth in terms of median values,” Mr Caine said.
“Even though our rents are going up, we still present a more affordable prospect than less populous cities like Brisbane.”
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