Melbourne property price falls stall in February, supply to be key factor in autumn

One thing alongside interest rates will be the major factor in whether Melbourne property prices fall further or hang tough in autumn.

This as-new house at 135 Somerset St, Richmond, smashed its reserve by more than $1m in February.

The decline of Melbourne’s property market has stalled, with low stock levels and sustained buyer demand insulating against further falls.

Supply will be the major factor of the autumn market, alongside interest rates, with the volume of listings a key determinant in whether prices fall further or hang tough.

Melbourne’s median dwelling price increased slightly, 0.18 per cent, to $791,000 in February, according to PropTrack’s latest Home Price Index, after remaining flat in January.

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The house median was up 0.15 per cent to $901,000 and the unit median ticked up 0.34 per cent to $604,000 in the second month of 2023, according to realestate.com.au’s data arm.

PropTrack economist Eleanor Creagh believed it was “too early to confidently call the end of the downturn” but noted it had “lost some steam” in recent months.

“Whilst interest rates have been the primary driver of price falls to date … constrained levels of properties for sale are putting a floor under prices,” she said.

“What happens in the months ahead will be governed not only by the trajectory of interest rate rises but also the level of supply.”

Ms Creagh said if listings volumes increased and interest rates continued to rise it was “likely that we could see further price falls” but tighter stock would help insulate that.

“Competition amongst potential buyers has actually increased relative to the spring selling season that we saw last year in Melbourne,” she said.

“Potential buyer demand on realestate.com.au is up close to 20 per cent on levels seen in the spring selling season last year … (this is driven by) in Melbourne total listings in January 2023 were down 15.4 per cent on the average in spring.”

A St Kilda garage priced at $90,000-$99,000 sold for $391,000 in February.

The price for 10/98 Grey St equated to about $7000 per square metre.

Melbourne’s median property price is now down 5.99 per cent year on year and 0.74 per cent in the past quarter.

The house figure is down just 0.71 per cent in the past quarter, and 6.1 per cent year on year, while the unit median is down 0.95 per cent over the quarter and 5.34 per cent over 12 months.

Ray White Victoria chief executive Stephen Dullens said their company’s listing volumes were in line with seasonal norms, which usually included an increase in March.

“Generally we see a bit of movement in the market now up until Easter, a bit of a break for Easter and holidays, then other people list to get in ahead of winter,” he said.

He said Ray White Victoria’s clearance rate was higher in January and February than it was at the end of 2022 and there were more average bidders per property.

Properties that ticked boxes for buyers, including being renovated or not needing work, have been drawing strong results under the hammer.

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