In the year to June, property values across greater Melbourne grew 13.7 per cent, just edging out Sydney homes, which rose 12.2 per cent. However, as the boom seems to be coming to a close, can the major capitals keep up the stellar pace of growth they have enjoyed over the past several years? And which of our two biggest cities is currently performing better?
October figures reveal a soft landing
In October, the median dwelling price across Sydney fell for the first time in almost a year and a half, dropping 0.5 per cent. At the same time, homes in Melbourne rose in value 0.5 per cent – an increase notably lower than previous months, but an increase nonetheless.
Melbourne has been able to stave off this current slump due to it attracting higher levels of migration, boosting demand for housing. However, auction clearance rates were down in both cities in October – perhaps indicative of a decline in buyer confidence, as well as a lack of investor activity thanks to APRA’s new regulations.
The October figures have led some industry commentators to speculate that, just as Sydney led the charge at the start of the boom, falling values in the harbour city may be the strongest signal yet that the market is softening.
With economists at several major banks calling the top of the market, and APRA’s crackdown on investor lending in full swing, the next few months may prove to be crucial for those seeking to answer the question: “Is the boom really over?”
Where are the standout suburbs?
In Liberty Grove, the median unit price has plummeted almost 12 per cent, to $748,750. Houses in Cecil Hills are down 8.2% to $861,000, while in Mulgoa they have fallen a massive 34 per cent, from $1,275,562 in 2016 to just $840,000 today. Unit prices are expected to continue to show similar signs of price decrease as supply surpasses demand.
Suburbs that have continued to record growth include Lewisham, where houses have increased in value 40.8 per cent since October 2016, to a new median of $1,858,500, and Longueville, where a jump of almost 60 per cent since last year has seen median values skyrocket to $4.23 million.
In the usually robust market of the inner-east, units in Ashburton have dropped 19.2 per cent, falling below the $1 million mark, while nearby Hawthorn recorded an 8.2 per cent drop – perhaps again due to the looming apartment glut.
Airport West has enjoyed solid growth, with units up 23.9 per cent and houses up 18.6 per cent for the year, while in Box Hill North both houses and units have increased by more than 20 per cent. In beachside Frankston, houses are up 40 per cent since this time last year, and more than 70 per cent since 2014, when the median was just $265,000. In Mickleham, buyers who signed contracts three years ago are laughing all the way to the bank, with a staggering 151 per cent growth in the value of their homes.
The mixed bag of results over the past 12 months in both Sydney and Melbourne seems to mirror the diverse opinions expressed by various property experts recently.For a view of where the market might be heading, check out our post on where you might be living in 2020.