State of the market: How spring selling season is shaping up in Melbourne
It’s no secret that spring is the start of the busiest time of year for property. But market conditions have changed significantly in the past six months. So what will the next few months look like?
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It’s no secret that spring heralds the start of the busiest time of year for property. But with market conditions having changed significantly in the past six months, what will spring 2022 look like?
The 2022 Spring Market Report is a suburb-by-suburb dive exploring the opportunities for buyers and sellers this season from the team at PropTrack.
Whether you’re a first-home buyer, seasoned investor or a homeowner looking for a change, knowing the current market metrics will be key to making informed property decisions this spring.
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As we enter the selling season, the No. 1 question on the minds of buyers and sellers is property prices, which have been falling nationally and in most capital cities.
Home prices nationally were down in July and are now 1.7 per cent below the peak they reached in March 2022.
Sydney and Melbourne have led the falls so far, with prices down more than 3 per cent from peak.
Conditions have also eased from earlier in the year.
Nationally, we’ve seen measures of buyer demand moderate and the time taken to sell a home has started to increase.
Auction clearance rates have also fallen.
In Melbourne, it’s now typically taking 35 days to sell a home. That’s still quicker than it was pre-pandemic, but it has started getting longer in recent months.
The good news for would-be buyers this spring is that there is more stock to choose from than has been the case for much of the past couple of years.
This year has been busy in property markets across the country, with more new listings nationally across the first half of the year than any year since 2015.
All that new stock coming to market, coupled with homes taking longer to sell, means buyers have more choice in market than has been true in recent years.
In Melbourne, the total number of homes listed for sale is now only slightly below the decade average.
That extra choice is helping to balance the market more in favour of buyers after tough conditions throughout much of the pandemic.
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Yet Melbourne sellers still have cause for optimism – prices in Melbourne are up 17 per cent compared to pre-pandemic.
While demand has softened, it is still stronger than pre-pandemic levels and homes are selling quicker than was typical for the couple of years prior to the pandemic.
Underpinning all these changes is the fact that the RBA has already raised interest rates almost two percentage points in the past four months.
That’s making repayments more expensive for existing borrowers and has reduced how much would-be buyers can borrow.
Mortgage repayments for a typical recent Melbourne buyer are up $620 a month since the RBA started raising rates in May.
That has already affected home prices, and, with inflation still well above the RBA’s target, interest rates will continue to rise.
Given how quickly and how far the RBA is raising interest rates, we expect home prices nationally will likely fall another 2-5 per cent this year, and another 7-10 per cent next year. Falls could be a bit larger than this in Melbourne, given the price premium for homes and the easing in demand over the past couple of years compared to other capitals.
But the longer-run fundamentals of the housing market remain strong.
Unemployment is extremely low, wages growth is picking up, inflation should start to ease, and international migration is returning.
In the near-term, there are opportunities for sellers to embrace this spring. Demand on realestate.com.au remains strong. Upgraders are in a good position on the back of the rapid equity growth we saw over the pandemic, investors are being lured back by rising rents, and first-home buyers remain active.
Angus Moore is an economist at PropTrack
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