Melbourne home prices rise at fastest pace in 15 months: PropTrack Home Price Index

Melbourne home prices have grown at their fastest pace in more than a year — and experts forecast the market recovery will continue to gain steam.

Melbourne property prices are up and experts now say they are “expecting prices to continue to rise”. Picture: Getty

Melbourne home prices have grown at their fastest pace since February 2022 — and experts forecast the market recovery will continue to gain steam.

The city’s home prices climbed .22 per cent in May to a $797,000 median dwelling value, according to the latest PropTrack Home Price Index released today.

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PropTrack senior economist Eleanor Creagh said the Reserve Bank decision to raise interest rates in May hadn’t deterred the home price rebound, which data shows was starting to rise.

“We’ve now seen every metro region in Melbourne has recorded a lift in prices over the past three months, indicating that price rises are becoming more widespread and pervasive,” she said.While stronger housing demand had become entrenched, Ms Creagh said a lack of supply of homes and slow increase in new stock continued to bolster prices through a rise in competition among buyers.

“We’ve seen stronger housing demand that really kicked off has continued throughout the first five months of this year, likely bolstered by the very strong rebound in net migration and very tight rental markets.

“Market conditions have improved, auction activity is up, clearance rates have firmed, they’re holding very steady above the level seen in the back half of 2022 when interest rates were quickly rising.”

The sale of this Balwyn home at 41 Yarrbat Ave was one of the highest for the month of May in Melbourne.

Ms Creagh said the rise in home values had become entrenched, with little evidence showing that price falls would resume at this point.

“We are past the point of this being a one-off change in market conditions. I would be expecting prices to continue to rise,” she said.

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Melbourne’s expensive suburbs have led the recovery, with inner east house prices rising 1.4 per cent in the past three months to a $1.387m median dwelling value, including areas such as Kew, Hawthorn, Camberwell and Balwyn.

Inner Melbourne suburbs also recorded a 1.31 per cent jump. This area includes Southbank, Thornbury, Richmond, Toorak and Armadale.

Melbourne’s western suburbs shows the weakest growth, with a .02 per cent rise.

Capital cities were leading the recovery in house prices nationally, Ms Creagh said.

PropTrack senior economist Eleanor Creagh

“In fact, capital city prices over the past quarter have grown at the fastest pace since the December quarter of 2021.”

Meanwhile, regional Victoria home prices dipped .2 per cent in May, although regional cities on the whole have less value to recover following the previous price boom.

The outcome of the next meeting of the Reserve Bank board was likely to have less impact on the market, given the factors leading to the rise in home prices, Ms Creagh said.

“Even if interest rates do rise further from here, we are still at or very close to peak levels.

“Now with that locking in stronger market conditions and house price gains becoming more widespread, I’d say there’s little to suggest that if interest rates lift again in June that price falls would resume.”

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