Melbourne house price falls stall in October: PropTrack Home Price Index

Melbourne home prices held up last month — but there is no end yet with another RBA interest rate decision looming today.

The four-bedroom house at 48 Pienza Rd, Fraser Rise, is for sale for $720,000-$780,000.

Melbourne home price falls stalled in October, but there is no end in sight yet as the Reserve Bank is expected to raise the cash rate another 0.25 per cent today.

The median property value in Melbourne was stagnant at $805,000 last month after six months of decreases since March’s peak, according to PropTrack’s Home Price Index.

Unit prices are holding up stronger than houses, with the unit median increasing 0.45 per cent to $609,000 as the house figure remained flat at $908,000 — but they didn’t have the gains.

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PropTrack economist Eleanor Creagh noted unit growth was “comparatively lacklustre” during the pandemic as house prices skyrocketed, so they were “experiencing a faster deterioration”.

“Interest rates continue to be the primary driver of home price falls, with the Reserve Bank raising the cash rate at the fastest pace since 1994, and we’re expecting a further 25 basis points to be added when the Reserve Bank meets today,” she said.

“This will continue to strain borrowing capacity and increase borrowing costs, with the cash rate now sitting at 2.6 per cent and then potentially 2.85 per cent after today’s meeting.

“Maximum borrowing capacity has been reduced by more than 20 per cent and it will take time for higher interest rates to fully affect house prices and we are likely to see them fall further in Melbourne as interest rates continue to rise.”

Ms Creagh noted factors including people returning to Melbourne, coming from overseas, and tight rental conditions, which could motivate investors and tenants who could afford to do so to buy, were helping hold up prices.

The two-bedroom unit at 1/8 View Rd, Springvale, is for sale for $550,000-$600,000.

She said first-home buyer schemes could help tenants escape the stressful rental market, but Property Home Base buyer’s advocate Julie DeBondt-Barker said many first-home buyers were still holding off for interest rate rises to settle.

“I think that we’re going to see a bit of a flurry just before Christmas for the ones that already have their finance in place,” she said.

“I think a lot of the other ones that don’t are sitting back and waiting to see how far the interest rates go and up if we get a movement on that nearly monthly I think that’s going to keep them pretty scared.”

The three-bedroom house at 6 Journey Ave, Doreen, is available at about Melbourne’s median property price. It’s for sale for $780,000-$858,000.

Real Estate Institute of Victoria president Andrew Meehan said houses that were well-presented and that did not need work done were selling best amid materials and trades shortages.

Melbourne home prices are 3.45 per cent below their levels a year ago but remain 15.8 per cent above pre-pandemic prices in March 2020, according to PropTrack.

Regional Victoria’s overall property median was also stagnant in October, at $604,000, with the house median sitting at $624,000 and the unit median $449,000.

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