With more homes on the market, a slight drop in average home values across Melbourne and an interest rate hold for December, the market is changing in the buyers favour.
The median value of homes in Melbourne dropped slightly during November, by -0.1 per cent, making the average price of a home in the city $779,914 as reported in Corelogic’s Hedonic Home Value Index released on December 1, 2023.
This makes Melbourne the third most expensive city nationally just ahead of Brisbane at $779,270 and behind Sydney ($1,125,533) and Canberra ( $842,677).
“Market conditions are now in favour of buyers as higher stock levels provide more choice, less urgency and greater opportunities to negotiate,” CoreLogic’s research director Tim Lawless said.
The number of homes advertised in Melbourne during November was above the previous five-year average according to the report.
Buyer demand has held strong despite high interest rates and “deeply pessimistic consumer sentiment” with sales roughly in line with the previous five-year average.
Moving into summer, typically a slow time for selling activity, vendors will have time to assess market conditions and their pricing expectations
“The Melbourne Cup day rate hike has clearly taken some heat out of the market, but other factors like rising advertised stock levels, worsening affordability and persistently low consumer sentiment are also acting as a drag on value growth in some markets,” Mr Lawless said.
This drag was seen in Melbourne with the city recording the lowest rate of growth on a monthly and rolling quarterly basis.
“The more expensive end of the market tends to lead the cycles in these cities,” Mr Lawless said.
“As borrowing capacity reduces, we may be seeing more demand deflected towards lower housing price points, with the broad middle of the market now recording the strongest rate of growth in Sydney and Melbourne.”
Auctions are clearly still the favourite method of selling across Melbourne with the city recording the most auctions nationally in Corelogic’s Property Market Indicator Summary for the week ending December 3, 2023.
Preliminary results reveal there were 1,380 homes listed for auction with 682 cleared for a clearance rate of 64.6 per cent, just below the national average of 67 per cent.
It was the third-busiest auction week of the year so far with numbers 19.2 per cent higher than the auction volumes seen this time in 2022 (1,158).
This impressive week of auctions comes off the back of a fall the week before with a -7.2 per cent drop in auctions with 1,309 put under the hammer and a clearance rate of 57.7 per cent.
The rental market in Melbourne remains extremely tight in November with a vacancy rate of 0.8 per cent. For comparison, in 2022 the vacancy rate was 1.3 per cent.
Rents have been increasing nationally for the past 40 months, since August 2020, with the quarterly trend even higher over the past two months.
Corelogic’s Property Market Indicator Summary for the week ending December 3, 2023 reveals the median rental price in Melbourne is $562.
That price reflects an 11.3 per cent increase in during the past 12 months with a 0.5 per cent increase the past month and 1.5 per cent increase for the quarter.
Gross yields for rental properties have increased to 3.43 per cent from 3.12 per cent in 2022.
Despite the slight decrease in average house value, Melbourne’s property market is performing strongly with auction clearance rates strong, a high level of advertised homes and a strong rental return.
The slight downturn in average price could be linked to buyer demand at lower pricing points due to higher interest rates and lower borrowing capacities.