Cheap was cheerful in Melbourne property last year.
Despite doom and gloom for the wider city, the most affordable homes — below $750,000 — ended 2018 without losing any ground.
CoreLogic’s latest Quarterly Economic Review reveals despite a 7 per cent correction across Melbourne, the bottom end notched a 0.5 per cent increase.
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The firm’s Australian head of real estate Geoff White said it showed how much home lenders had shaped the market, with first-home buyers typically looking to borrow smaller sums.
“That sector was ticking over quite well,” Mr White said.
“And from what I’m hearing, it still is.”
Meanwhile the city’s top end homes tumbled up to 11.2 per cent.
“It was all about the buyer cautiousness in the market place, particularly those in the mid to upper end of the value ranges,” Mr White said.
National Property Buyers director Antony Bucello said a substantial factor in falling prices was that A-grade homeowners were avoiding selling, but more was available in first-home buyer friendly price ranges between $500,000 and $750,000.
“Properties that would achieve great prices are not on the market,” Mr Bucello said.
“Overall there aren’t as many out there, but there are more in that ($500,000-$750,000) bracket.
“That market is still very strong.”
Most of the property market pain was felt in the final three months of the year, with Melbourne’s wider home market’s 7 per cent fall across 2018 including a 3.2 per cent reduction in that period.
The falling values also appeared to hit the number of sales, with the 17,557 homes sold falling more than a quarter compared to the same period in 2017.
The reduction in sales reflected a combination of fewer listings, poor clearance rates, properties lingering on the market and homeowners walking away from selling after finding they weren’t going to get the price they wanted, Mr White said.
“There would have been vendors listing their property thinking they would get out with a 2017-level price, but who found there was a gap between that and what buyers were prepared to pay,” Mr White said.
“And a lot of those who didn’t sell eventually withdrew from the market.”
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Early signs indicate the first months of 2019 could be better, with a notable increase in people inspecting properties around the city.
Mr Bucello said the market could turn a corner by mid 2019, but would not head straight into a huge upturn.