Headlines would have you believe that property prices are down close to 10% across the city.
This simply is not true. There is no single ‘Melbourne Market’. In fact, the residential real estate market in Melbourne can be segmented a number of different ways:
- Type (House, Apartment, Townhouse)
- Size (Land m2, Bedrooms/Bathrooms/Car, Squares)
- Age (Older, Newer, Renovated)
- Price (Under $0.6m, $0.6m – $1.0m, $1.0m – $2.0m, etc)
- Geography (Region, Council Area, Suburb, Neighbourhood)
- Proximity to CBD, Transport, Amenities
At any given point in time, some market segments are up, while others are down or flat. Of course, after 5+ years of solid capital growth, general market conditions have settled down considerably, but that’s not to say there aren’t good buying opportunities and growth prospects for developers and for investors.
We’ve segmented each Local Government Area (LGA) in Melbourne according to Median $ House Price.
The below graphs show how House Prices have changed over the last 12 months and 36 months for every LGA within Melbourne. In Grey are those 25% of LGAs with the highest Median $ House Price; in Green are those 25% of LGAs with the lowest Median $ House Price; and, in Red, are those 50% of LGAs in the middle.
The LGAs to the left of the middle line have seen lower than average price growth over the last 12 months (less than 5%); those to the right have experienced higher than average. Similarly, the LGAs below the middle line have seen lower than average price growth over the last 36 months (less than 36%); those above have experienced higher than average.
Put simply, the LGAs in the top righthand corner have performed the strongest in recent times. Those in the bottom left, not so much.
Do you see the trend? Notice how most of the middle $ LGAs hover around the centre – price growth has been pretty close to the average over the last 12 and 36 months. Look at the high $ LGAS – they’ve generally performed below average. And, the low $ LGAs – every single one has experienced above average $ price growth over the last 12 months (left-right) and the last 36 months (up-down).
While the graph is a bit difficult to grasp at first, this is a pretty straightforward piece of analysis into the Melbourne market.
The outtake is consistent with what we’ve been posting for a while. When the market is booming, the higher priced areas closest to the CBD tend to increase first and at great speed. But, when the market cools, these areas tend to come back to earth quickly, and in dramatic fashion. The lower priced areas on the other hand tend to lag behind the curve a bit, growing at a slower rate and at a steadier pace. And, the middle market tends to split the difference.
The below graph isolates the Highest- and Lowest-Priced LGAs.
Stonnington, in the bottom left and with a Median $ House Price of $1.84m, has experienced significant price drops over the last 12 months, and, partly as a result, has seen little if any capital growth over the last 36 months. With a Median $ House Price of $0.56m (less than 1/3 of Stonnington’s), Hume in the top right has kicked on considerably in recent times.
If you had purchased in the last year or two, hopefully you’d read this post of ours beforehand, and avoided buying at the top of the curve in one Melbourne’s more expensive areas. If you’re considering purchasing over coming months, get in touch with us to ensure that you’re making the best possible decision for your circumstances (Property Type, Size, Age, Price, Geography, etc).
