Melbourne’s Median $ House Price is up +8%, down -4%, and flat. All 3 figures are true at the same time.
Measuring median prices by rolling 12-month periods is the most conservative method for determining market changes. The Median $ House Price for properties sold from July 2019 to June 2020 was $917,000, which is +8% higher than the Median $ House Price for properties sold from July 2018 to June 2019 ($851,000).
Rolling 12-month medians are useful for long-term trend analyses, but not for identifying emerging changes in the market. Naturally, we’re all very focussed on what’s happening now, and what’s likely to happen in the coming months. Median $ House Prices for properties sold within individual months is shown below.
Monthly figures aren’t particularly useful in determining actual percentage changes (unless incorporated into an index or algorithm) but they can be useful in identifying the bottom and top of market cycles.
Momentum in the market is a funny thing, and it’s encouraging to see prices stabilise following the sharp drop in April this year.
Rolling 3-month periods smooth out the dramatic changes seen through monthly analysis and are useful for identifying the emerging trends that rolling 12-month periods can’t. The below graph shows that in the 3 months since the start of this COVID crisis, Melbourne’s Median $ House Price sits at $930,000, which is -4% lower than it was the 3 months preceding COVID, and nearly exactly what it was at the end of last year.
Putting all these methods together in one visual is the best way to make sense of current market conditions. All three point to the same conclusion:
Even with the social and economic lockdowns associated with a global pandemic, Melbourne’s Median $ House Price has remained pretty stable.
One further metric overlayed onto this graph is sales volumes.
There have been 40% fewer sales in the last 3 months than there were in the same period last year. A significant drop in supply has played a big role in stabilising house prices.
More properties will naturally come onto the market as Spring approaches. The second wave of COVID lockdowns in Victoria will negatively impact Unemployment, Mortgage Serviceability, and Rental Vacancy Rates, meaning many vendors will be highly motivated to sell. The market has proven remarkably resilient to-date, and there will be some very good buying opportunities for smart investors, but further price falls are likely in many areas – any way you measure.
