Are you curious about the future of Melbourne’s property market in 2024?
Melbourne’s housing market hasn’t been as strong as other capital cities in the past year. But, property values in Melbourne are expected to rise in 2024.
Melbourne’s property markets update
Since the start of the Covid pandemic, property values in Melbourne have risen by 10.9% yet they are still 4.2% below their peak in March 2022.
Below is the most recent information on median property prices in Melbourne.
The Melbourne property market has stayed strong. Listings and clearance rates are high. At the start of 2024, property sellers have been cautious. This has led to fewer properties for sale. Vendors are waiting out the current uncertainties. Despite this, strategic investors and homebuyers are returning. They actively seek opportunities to improve their portfolios. Or, they seek their next home. They are carefully selecting the best options.
According to SQM Research,
- Melbourne’s property listings in January 2024 totaled 32,684
- Marking an 8.3% decrease from the previous month
- A 6.2% increase compared to the previous year.
The auction market in Melbourne also started the year strong. It showed robust interest from buyers.
The Melbourne property market is diverse. Not all properties perform the same there. People still want premium homes and top-tier investment properties. These kinds of properties often keep their value well. Buyers prefer quality, but there are few top-grade properties. This is because demand is strong and lower-grade properties take longer to sell. Savvy buyers avoid the least desirable options.
This situation presents a unique opportunity for long-term homebuyers and investors. Many discretionary participants have left the market. Basic needs continue to drive the housing market, such as marriages, divorces, births, and moves, persist in Melbourne. We are more confident that rate hikes have stopped and inflation is under control. So, we can expect a surge in market activity. Buyers will eagerly return.
Melbourne’s rental markets continue to be extremely competitive
Rental markets in Melbourne are tight. They often have lower vacancy rates than the national average. Demand has surged and there’s a shortage in Victoria and across Australia. So, the national vacancy rate is now unusually low by historical standards.
SQM Research says that Melbourne’s vacancy rate is at 1.5%. A balanced market’s rate is typically 2% to 2.5%.
This situation is hardly surprising. Melbourne’s rental market, along with many others nationwide, is experiencing a critical shortage. Vacancy rates are near record lows. Rents are rising and demand is strong. Also, the population is growing. These factors have made Melbourne’s market highly stressed.
The stats are about vacancy rates and weekly rent listings. They show the tough situation of Melbourne’s rental market. They paint a grim picture for tenants.
- Melbourne’s rental vacancy rates dropped. Rental listings fell too. This was due to two key factors:
- Firstly, the city’s robust economy and job market play a significant role. Melbourne is a hub for major sectors, such as finance, technology, and healthcare. The city continues to boost housing demand as these industries flourish.
Secondly, Melbourne’s population growth is a contributing factor. The city’s population has steadily increased. People have moved to Melbourne to take its jobs and enjoy its good life.
These factors have increased the demand for housing. This has led to fierce competition among renters and lower vacancy rates.
In essence, Melbourne’s falling vacancy rates show the city is vital and growing. This scenario might make it hard for renters to find properties. Melbourne remains an appealing place to live and work.
Major Trends in Melbourne’s Housing Market for 2024
According to CoreLogic’s report 2023, Melbourne’s property market has consistently been a top performer. It has been so for the past 40 years. However, the COVID-19 pandemic and multiple lockdowns severely impacted the city. This led residents to move to Queensland. It also stopped international migration due to closed borders.
Melbourne had the longest lockdowns globally. It also had 13 interest rate hikes. Consumer confidence was historically low. The year saw a barrage of negative media coverage. There were also tighter lending rules and yet it still navigated through these challenges.
Property prices surged by 15.8% during 2020 and 2021. However, Melbourne’s housing values declined by 7.9% from their peak in March 2022 to a recent low in January 2023.
The Melbourne housing market began to recover in early 2023, but its property price growth has been slower than some other cities. Nevertheless, Melbourne has definitely moved past the lowest point of its recent downturn. Its price recovery this year has not been as strong as Sydney but Melbourne also avoided the larger drops in 2022.
Signs strongly suggest that property values in Melbourne are set to grow in 2024. Rents are too. However, it’s important to note that the Melbourne housing market varied greatly in 2023. Over 50 suburbs in Victoria outpaced the national average in house price growth for the year.
In terms of location, the housing markets in Melbourne’s Inner and Outer East have slightly outperformed. But, in the North West and West, prices have started to level off, rather than rise. Outside the city, things are somewhat softer. Property prices in most of Victoria’s towns are declining or, at best, staying the same.
Despite a worse 2023, it’s crucial to remember that, over the past four decades, Melbourne’s property market has been consistently strong and stable.
Predictions for Melbourne’s Property Market in 2024
Looking at the details reveals something. Melbourne’s property landscape is diverse. It is a mosaic of markets. But, certain properties have far outperformed others. Notably, standalone homes are located near the CBD or in sought-after school zones. These homes have shown remarkable stability.
This situation shows sharp contrasts. Some properties excel, while others fall short.
Most experts think that Melbourne’s growing population will raise property prices. They think this because housing supply is limited. This will happen in the next phase of the property cycle.
The trend will continue up. This will happen. It is despite the Reserve Bank’s ongoing efforts to curb Australia’s rising inflation. They are doing this through successive interest rate increases.
Melbourne’s property market has not kept pace with Sydney and Brisbane. We are now seeing some strong signs it will keep rising.
Consider the latest expert predictions for Melbourne’s property market:
- ANZ anticipates property prices in Melbourne will increase by 3-4% in 2024.
- CBA projects a 5% rise in property prices in Melbourne for 2024.
- NAB expects a 5.5% increase in Melbourne property prices in 2024.
- Westpac predicts a 3% growth in property prices in Melbourne in 2024.
- PropTrack estimates a 1-4% rise in Melbourne property prices for 2024.
- SQM suggests there could be up to a 3% decrease in property prices in Melbourne in 2024.
Are you curious about what would be a good property investment?
You may be one of many property investors who are currently pondering on their next move in the current market. You might be questioning whether to buy, sell, or simply hold off for now.
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