Melbourne house and unit price growth gained momentum over the December quarter as buyer and seller activity rebounded post lockdown.
Domain’s latest house price report showed that…
- Melbourne House and unit prices are at new record highs.
- House prices reached a new record high at $1.1 million, after the strongest annual gain since 2010, at 18.6 per cent.
- House prices rose $660 a day over the quarter, the steepest dollar increase on record for a single quarter.
- Unit prices increased 3.9 per cent over the quarter to a new record high of $593,387, this is the strongest quarterly gain in two years.
- Since late 2020 annual house price growth has significantly outperformed units. This is the largest divergence in growth on record, pushing the price gap between property types to an all-time high.
Commenting on the state of Melbourne property prices, Dr. Nicola Powell, Domain Chief of Research and Economics said explained…
“Over the past three years, the final quarter has provided a better outcome for prices compared to the others.
This has been particularly poignant in 2020, and 2021, considering the December quarter coincided with lengthy restrictions easing, which saw buyers and sellers return to the market with enthusiasm following a pandemic-induced retreat.
Over the December 2021 quarter, there was a strong reaction to list homes for sale as newly advertised supply surged by 31 per cent compared to the five-year average.
This resulted in a record number of homes scheduled for auction, soaring 61 per cent above the five-year average at roughly 17,500.
Buyers responded to the freedom of private inspections and greater choice, for sale inquiries over the December quarter jumped 18 per cent above its five-year average and the number of homes sold has edged close to a record.
This highlights the severe impact banning private inspections and auctions has had on hampering real estate activity.”
There are headwinds for Melbourne’s property market despite the recent price rebound.
Dr. Powell said:
“Severe and extended lockdowns have driven many businesses to close and there has been a sharp drain of residents away from the city.
Further evidence suggests a more modest rate of price growth is on the horizon.
The availability of homes for sale is building, with total supply now sitting 10 per cent above the five-year average and the value and volume of new home loans remaining below its peak.
Historically, Melbourne’s property market has been sensitive to changes in macro-prudential measures, any further changes by the banking regulator could place a further strain on demand.
Sellers should move into 2022 with a more realistic view of pricing because buyers now have more choices.”