Sydney may have bested Melbourne in the January 2020 quarter, but Melbourne was the leader when it came to growth over the previous 12 months, with an 8.2% increase in dwelling prices to Sydney’s 7.9%, as per CoreLogic’s Home Value Index.
The report notes that Melbourne is much closer to a full nominal recovery than Sydney is; values needing to increase by only 1.2% in the former, while values have to rise a further 5.4% in the latter.
Properties in Melbourne’s top-quartile market also saw a boost of 11.5% in prices, indicating that luxury buyers are out in full swing. Nonetheless, there is growth across the board, as the lower-quartile market recorded 5.6% growth as well.
The inner-east district in particular is showing great positivity, as dwelling values rose by 16.2% in the year to January.
“With such a rapid rate of growth, housing values in this area are likely to reach a new record high over the coming months,” says CoreLogic head of research Tim Lawless.
Domain economist Trent Wiltshire affirms that there are some high hopes for Melbourne going into the next couple of years.
“Melbourne’s median house price is forecast to rise 8% in 2020 and then by 3% to 5% in 2021. This will mean Melbourne’s median house price reaches around $970,000 by the end of this year and will hit the $1m mark by the second half of 2021. This is 10% above the recent peak of $909,000 reached in December 2017,” he says in Domain’s Property Price Predictions for 2020–2021 report.
“Melbourne’s unit prices are expected to grow rapidly in the first half of 2020, following a strong end to 2019, before price growth slows. We’re forecasting the median unit price to rise 5% in 2020 then by around 3% in 2021.”
Population growth has long been an important foundation of Melbourne’s strength in the market, and the capital is already regarded as Australia’s largest city, according to Real Estate of Australia president Adrian Kelly. With population numbers forecast to swell more in the next decade, Melbourne is expected to continue its positive run into the near future.
While the recent outbreak of COVID-19 is making some buyers and sellers in the big cities hesitate, Propertyology’s Simon Pressley believes there won’t be a major impact on thriving markets in the long term.
“The impact of a virus on a property market is akin to a water stain on a ceiling – we know that it must be taken seriously, but it has no bearing at all on the foundations of the asset. Past global viruses have had no impact on any property market!” Pressley says.