Melbourne house price correction predicted for 2022: SQM Research Boom and Bust report
Melbourne house prices are expected to peak next year — but these Victorian suburbs are strongly placed to hold firm.
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The Victorian suburbs best placed to weather a house price correction have been revealed, with the Melbourne market predicted to hit its peak next year before prices start to fall.
SQM Research’s latest Housing Boom and Bust Report, released today, forecasts a slowdown in the stratospheric price gains recorded over the past 18 months, before a price drop.
Ballarat, Geelong suburb Grovedale, Carrum Downs, Lockwood near Bendigo, and Diamond Creek were flagged as the state’s top suburbs with the best future prospects.
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This was based on short and long-term indicators including local amenities, the number of days on market, stock levels and rental figures.
Each of Victoria’s top five suburbs scored a rating of between 3.72 to 3.89 stars.
SQM Research director Louis Christopher said suburbs with the highest scores stood the best chance of weathering a market correction, which he predicted would occur as early as mid next year.
In a situation where APRA moved to further restrict home lending by June — considered by the report as the most likely scenario — metropolitan Melbourne’s dwelling prices would fall by about 3 per cent or grow by just 2 per cent next year, according to the report.
Mr Christopher said it was impossible to tell how deep or long the downturn would be.
But units, supported by an uptick in overseas migration, would likely have a turnaround in rents and prices.
Lower budget buyers previously priced out of the market would also benefit from the price drop.
“I think for first-home buyers, it will end up being relatively good news. It should be a reprieve from the boom time conditions,” Mr Christopher said.
“For home sellers, I think we’re getting very close, if not we’re at the peak of the market.
“I don’t think that selling conditions are going to get any better than what they are. They’ll probably deteriorate as the year progresses.”
Hocking Stuart agent Samantha McCarthy said market predictions were important but needed to be taken with a grain of salt.
Commentators predicted the market would crash at the pandemic’s outset, but it had actually had “the complete opposite” effect.
“It is important if you’re looking to buy and sell to take (these predictions) into consideration,” Ms McCarthy said.
“But it’s also important that your daily life and situation come into play, irrelevant of what the price growth may or may not be.”
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PERFECT TIMING
Jacqui Moore and her husband, Trevor, were thrilled when their Tarneit home recently sold for $835,000.
The pair plan to move to Geelong, where they’ve built a new home closer to Mr Moore’s work.
Delays in the build caused by the Covid-19 pandemic meant they had ultimately timed their sale just right to catch the peak of the market.
Mrs Moore said she did worry about future affordability prospects for the younger generation, particular first-home buyers like her 21-year-old daughter, Keely.
“She’s trying to get into the market now. Her and her boyfriend are saving their little hearts out,” Mrs Moore said.
“But salaries are hopefully going up as well and they’re saying that the market’s going to come down a little bit then go back up a little bit. So you hope that there is still a window where they can get in.”
BEST PROSPECTS 2022
(Victoria, Rating out of five stars)
Ballarat – 3.89 stars
Grovedale – 3.88 stars
Carrum Downs – 3.87 stars
Lockwood – 3.75 stars
Diamond Creek – 3.72 stars
Source: SQM Research Housing Boom and Bust Report 2022
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