How is the Melbourne Housing Market Performing

What are House Prices doing in Melbourne?

That’s effectively what people are focussed on when they ask us about our thoughts on the market.

Are prices up, down, or sideways? And, of course, what does that mean for my property?

Melbourne consists of over 400 suburbs. When considering the overall state of the market, we analyse all of these suburbs against 4 straightforward metrics:

1. Sales Volumes
2. Monthly Median $ House Price
3. Rolling 3 Month Median $ House Price
4. Rolling 12 Month Median $ House Price

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Sales Volumes provide important context to Median $ House Prices.

Sales Volumes fluctuate seasonally. The number of houses sold typically peaks in late Spring, in October-November. Very few properties are listed for sale immediately following this period, so January typically sees very few sales. The market comes back to life in February and then ticks along until Spring approaches again.

Notice how low Sales Volumes have been since the COVID Crisis began in March 2020?

Compared to April to July 2019, volumes are down 34%. The lockdowns notwithstanding, fewer people have been willing to list their houses for sale during these uncertain times. This lack of supply has undoubtedly played a big role in stabilising prices.

Monthly Median $ House Prices naturally fluctuate quite a bit from month-to-month. Unfortunately, many in the media latch on to these dramatic changes as an easy way to get clicks.

It’s important not to over-interpret short-term changes in monthly results. String a few months together though, and you can get a good feel of emerging trends. Look at the significant change in the Monthly Median $ House Price from March to April 2020. While no credible Analyst pointed to it as a statistically significant change at the time, in retrospect, the drop was likely a COVID-induced market correction. Since then, the Monthly Median $ Price has been remarkably stable.

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Rolling 3 Month Median $ House Prices smooth out the dramatic fluctuations seen month-to-month, and are useful for identifying emerging trends quickly.

Analysing Monthly and Rolling 3 Month Median $ House Prices together can be very informative. Look at the middle of 2019. The Monthly Median bottomed out in July, and then rose significantly in the months following. As we moved into September, it was clear to us that the market was rebounding and we encouraged our clientele to look seriously at some good buying opportunities.

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The third way that we measure prices is by Rolling 12 Month periods. It is a slow-moving, conservative way to assess the market.

While this method is not very useful for identifying emerging trends, it can provide some important historical context to people’s thinking. For example, with all the madness and uncertainty in the world right now, you’d be forgiven for not immediately realising that House Prices are about 10% higher now than they were the same time last year.

So, how is the Melbourne Housing Market Performing in our Opinion?

Remarkably well. Following a short, sharp correction in April, Melbourne’s Median $ House Price has remained relatively stable. Prices are down about -4% from their peak in March 2020, but they remain 10% higher than they were the same time last year, and up slightly from where they were at the end of 2019. More properties will naturally come on the market as we approach Spring, but given how short Supply has been in recent months, we expect buyer Demand will strengthen in-kind.

For more analysis like this, or to discuss how we can help you find the right property for your individual circumstances and objectives, please reach out to us here.