Melbourne Property Market – Prices, Trends, Forecast [September 2024]

Melbourne’s property market has been under pressure, with home values experiencing a decline. The city saw a slight decrease of 0.2% in home values in August 2024, which contributed to a more significant drop of 1.2% over the quarter.

Melbourne’s current market conditions reflect broader challenges, including affordability issues and economic factors that are weighing down demand.

Melbourne Property Price Growth

Price growth in Melbourne has been negative recently, with an annual decrease of 1.0%. The median dwelling value in Melbourne now stands at $776,044, which has been overtaken by both Adelaide and Perth, making it one of the lower median values among the major Australian capitals.

CoreLogic Home Value Index

Melbourne Property Market Trends

The Melbourne market is characterized by a softer performance compared to other major cities. The decline in home values has been influenced by several factors, including an increase in taxes on investment properties and a higher supply of housing, which has outpaced demand. Additionally, Melbourne’s property market has been affected by interstate migration trends and an overall cooling of buyer sentiment.

Summary of housing values since the onset of COVID in March 2020 and relative to peak levels (onset of COVID calculated from March 2020).

Top 10 Greater Melbourne SA3’s with highest 12-month value growth – Dwellings

Top 10 Regional VIC SA3’s with highest 12-month value growth – Dwellings

Melbourne Property Market Forecast

Looking ahead, Melbourne’s property market is expected to face continued challenges. Affordability constraints, higher taxes, and a relatively high supply of properties are likely to keep price growth subdued. The market may see further declines unless there is a significant change in economic conditions or a resurgence in buyer demand.

The Reserve Bank of Australia’s ongoing adjustments to interest rates will likely play a crucial role in shaping market dynamics, as higher borrowing costs limit purchasing power for many buyers.

Here are some of the most recent forecasts by the big-4 banks in Australia:

• ANZ predicts a 5-6% increase in capital city property prices in 2024, with Brisbane expected to see the highest rise at 9-10%, Perth property values could go up by 1-11%, Sydney by 4-5%, and Melbourne prices by 2-3%.
• CBA forecasts a 5% rise in capital city prices, with some variations: Brisbane is anticipated to grow by 6%, Melbourne and Perth by 5%, Sydney by 4%, and Adelaide by 1%.
• NAB projects a 5.4% average increase across the capitals, with Brisbane expected to see a 6.5% rise, Perth and Adelaide by 6.2%, Melbourne by 5.5%, Sydney by 5%, and Hobart remaining flat.
• Westpac expects a 6% growth across the combined capitals, with Perth leading at 10%, followed by Brisbane at 8%, Sydney at 6%, Adelaide at 4%, and Melbourne at 3%

Oxford Economics recently released property forecasts predicting where house prices will be in three years.

Conclusion for Homeowners

Melbourne’s property market is currently experiencing a downturn, with declining home values and subdued demand. Homeowners and potential buyers should be cautious and closely monitor market conditions, as the city’s property market is likely to remain under pressure in the near term.

Next steps