Victorian homes have skyrocketed in value to a massive $2.55 trillion

Experts suggest the total value of dwellings in Victoria has surged to nearly its peak due to chronic undersupply of homes and an influx of expats.

The total value of dwellings has surged to $2.55 trillion.

Victoria’s housing market is now worth a combined $2.55 trillion after a $60bn surge that has validated expert claims that the property market is rebounding.

The state is even closing in on the $2.59 trillion record set in March 2022 when the cash rate was just 0.1 per cent.

Ray White chief economist Nerida Conisbee said the sharp uptick was a further sign an interest rate-hike led property market correction was now “well and truly over”.

Australian Bureau of Statistics data showed the total value of dwellings for Victoria had risen to $2.55 trillion in June from $2.49 trillion in the March 2023 quarter.

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Ms Conisbee said interest rates were now likely at their peak, which was making a difference in buyer confidence and pushing up prices, with the figure was likely to be higher again in September.

“We’ve got migration so that’s pushing up prices, and then also very few new homes that’s pushing a lot of people into the established market,” Ms Conisbee.

“All of these factors are pushing up the value of existing dwellings.”

While figures had been trending downwards until March 2023 the $60bn jump in the data released yesterday is the latest sign of the market’s about face.

Ms Conisbee said interest rates were likely at their peak.

Ms Conisbee said the resurgence was in part because prices didn’t fall as much as expected, even though interest rates had risen “very, very rapidly.”

“That’s why the downturn was quite low in terms of the total value of dwelling stock,” she said.

“Over that time, we did see homes being completed, so there would have been some completions as well; but that was relatively low given that we have had construction challenges.”

Real Estate Institute of Victoria (REIV) chief executive Quentin Kilian said while dwelling values had been rising sharply in the past few years, the most recent surge was “more of a stabilisation than a peak”.

“The trend is likely over the next couple of years to continue upwards but with less haste than what we’ve seen probably since about June 2020,” Mr Kilian said.

Mr Kilian said the influx of expats returning since the end of Covid was a factor as to why home values had increased.

However, Mr Kilian said housing valuation growth was increasing predominantly because of a chronic under supply of housing and an influx of expats returning to Australia.

“We haven’t been resupplying the market since the end of Covid,” he said.

“What we now see is very much an undersupply right across the housing market and there isn’t a strong pipeline coming through.”

He added that the total value of dwellings would “organically” grow and “balance out” if supply was boosted as opposed to forced growth from a lack of supply that led to sharp peaks and troughs.

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Originally published as Victorian homes have skyrocketed in value to a massive $2.55 trillion