Dwelling prices are down 3.4% across Melbourne for the past 12 months and 4.4% lower than their peak in November 2017 as reported by CoreLogic in their September 2018 quarterly report. These are headline numbers but lets take a closer look to see what is going on between the cracks.
The Melbourne market has slowed down with total settled sales down 15.8% in the past twelve months that has created two separate markets that are behaving very differently being those that are still affordable and those that are not.
Lets take a look at the most expensive housing markets in Melbourne. These four suburbs were the most expensive in 2007 and 2017 according to a Domain report in March 2018. Toorak's median house price has declined 34% this year alone with a current median house price of $3.15m.
Suburb Median House Price Jan-Sep 18
Toorak $3,150,000 (34.4)%
Malvern $2,500,000 (7.4)%
Canterbury $2,372,500 (22.2)%
Brighton $2,295,000 (18.0)%
There are some sizeable declines and in some cases much higher than the headline decline of 4.4% since the peak of November 2017. Some suburbs have dropped in line with the market such as Richmond at (4.4)% and Preston at (2.1)% with a median house price closer to the $1.0m mark.
What is most interesting is the affordable end of the market in the outer suburbs of Melbourne (30-50km from the CBD) where we have seen strong median house price growth so far this year with 3 months left in 2018 combined with sustained low vacancy rates.
Suburb Median House Price Jan-Sep 18 Vacancy Rate
Eynesbury $565,000 16.8% 1.9%
Truganina $575,500 12.7% 1.9%
Mernda $585,000 11.1% 1.9%
Tarneit $570,000 9.6% 1.9%
Werribee $500,500 8.3% 1.6%
Epping $610,000 8.0% 0.8%
Craigieburn $550,000 8.0% 1.1%
Wyndham Vale $480,000 7.9% 2.6%
Cranbourne $550,000 7.7% 1.9%
A similar story is the Geelong region with affordable suburbs out pacing the inner and middle ring suburbs of Melbourne.
Suburb Median House Price Jan-Sep 18
Waurn Ponds $608,000 14.4%
Grovedale $480,000 11.1%
Highton $680,000 8.8%
Negative media reports about an imminent price drop in Melbourne have already occurred in higher priced suburbs. You don't have to wait for the correction to occur. This market is now all about affordability which is further evidenced by unit prices falling by less than house prices since the peak in November last year.
After all rental price growth in Melbourne has grown by 2.6% in the past 12 months and vacancy rates are still very low. Combined with strong population growth in Melbourne due to overseas migration, the affordable regions of Melbourne and the Geelong market will continue to perform well while the less affordably suburbs continue their correction headlined in the media.
If you want to know more about which suburbs to buy in Melbourne, then please feel free to contact us.
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