There were 163 reported auctions held in Melbourne last weekend ending May 31, 2020 showing a clearance rate of 74% according to the REIV. At the same time last year (May 2019) there were 634 auctions with an auction clearance rate of 65%.
A 0.9 per cent fall in house and unit values in May made the city the nation’s worst-performing capital for the second month in a row, according to property data firm CoreLogic. A combined 1.2 per cent dwelling value fall over the two months has brought the city’s median home value to $686,798 median.
It comes off the back of the city’s median home value hitting a record high just prior to the pandemic. Melbourne’s more affluent areas including the inner south and inner suburbs were the hardest hit in May, with 1.4 per cent and 1.3 per cent home value falls respectively. However they fell just 0.1% in the outer west and 0.3% on the city’s north west fringe last month.
According to research data, Melbourne has had the second worst 12-month market outlook out of all the capital cities, only behind Sydney. Falls in tourism, international students and migration will continue to impact the property market. He said median sale prices would continue to slightly decline in the next 12 months, with inner-city apartments, luxury homes and properties in university and hospitality hubs set to be the hardest hit.
In our opinion, what we are seeing today is a progressively downward price spiral of house prices which could get a whole lot worse in coming months, especially once the Federal Government’s stimulus starts tapering off and when banks stop deferring loan repayments. Limited stock plus Government support like JobKeeper and mortgage holidays from banks are the main reason why house prices have not fallen off the cliff yet. Therefore the bigger question is whether or not this momentum we’re now seeing can actually be sustained through to spring when, presumably, the government starts tapering off their financial support.
Your Australian Property Tips #
Don’t be fooled by the higher auction clearance rates as it’s not the best yardstick to measure the performance of the Melbourne property market. Make sure you’re extremely diligent when working out a price to pay, as the last thing you want is that you end up paying too much!
Happy House Hunting!