Melbourne home values: House prices suffer festive fall, but silver lining looms for new year

Melbourne’s property market has taken a pre-Christmas hit that will send households into the festive season with their home’s value down $1000s of dollars.

A $3360 fall in Melbourne’s typical house value has been revealed just 24 days before Christmas, but experts believe there will be a silver lining in the new year. Picture: Jason Edwards.

Melbourne’s housing market has taken a $3360 pre-Christmas hit in its first festive fall since 2018.

But there’s a silver lining as economists hint “aggressive” home value wipe-out forecasts look less likely to come true, and a growing chorus of property pundits, including the Real Estate Institute of Victoria, predicting prices could soon resume rising.

The latest PropTrack Home Price Index released Thursday revealed the city’s median house value fell 0.37 per cent across November to $908,000.

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It’s now down $51,665 (5.69 per cent) from when the market peaked in March this year, though has resumed falling after remaining flat in October.

Melbourne’s typical unit lost a more modest $670 (0.11 per cent) in the same month, and is down close to $22,000 since values topped out.

PropTrack had predicted property prices could tumble 9-14 per cent from the market’s peak to the end of 2023. Others such as the ANZ bank have forecast falls closer to 20 per cent for Aussie homes.

Melbourne house values have fallen more than 5 per cent since the market peaked.

PropTrack senior economist Eleanor Creagh said while it was too early to “pick the bottom”, the “more aggressive” forecasts were now in doubt.

“The downside end of these forecasts probably won’t be hit,” Ms Creagh said.

“But we don’t expect values to stabilise or price falls to be behind us until interest rates stop rising, though that looks like it could be the first quarter of next year.”

She added that Melbourne house prices were still 17.54 per cent above pre-pandemic levels.

Across the rest of Victoria the typical house lost $311.50 in November, while a middle-of-the-road unit declined $568.

REIV president Andrew Meehan said the Institute was increasingly confident the market was in a “normal” state and wasn’t far off becoming a rising market.

Melbourne home prices could perform better in 2023 than they have in 2022.

“There’s still underlying demand and I just think that means we won’t see a crash,” Mr Meehan said.

“It’s the scale of interest rate rises that will be important now. If they are modest (0.25 per cent or less), the market has almost adjusted to the idea that we will see them and is starting to factor them in.”

Earlier this week SQM Research managing director and respected property pundit Louis Christopher predicted Melbourne’s median house price could rise $45,500 in the next 12 months — potentially covering almost all of the losses to date.

Mr Christopher’s prediction was based on the RBA keeping the cash rate, which dictates interest rates for mortgages and is currently at 2.85 per cent, at or below 4 per cent.

Melbourne unit values are falling at a slower rate than houses. Picture: Sarah Matray.

There was further good news for Victoria’s housing industry Wednesday with new Australian Bureau of Statistics figures showing the 5585 new homes approved for construction in October was up 5.8 per cent in its biggest uptick since July.

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