Melbourne’s housing market kicked off the new year with yet another fall in prices — and there are more to come.
But experts say there’s a “silver lining” for budding buyers: affordability is improving.
The city’s house and unit values combined dipped 1.6 per cent in January — the second largest fall of Australia’s capitals, just behind Darwin’s 1.7 per cent, according to CoreLogic’s latest Hedonic Home Value Index.
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Melbourne’s quarterly and annual declines also intensified, to 4 per cent and 8.3 per cent respectively.
Its median home value now sits at $636,048. The figure was about $720,000 when the market peaked in late-2017.
CoreLogic head of research Tim Lawless said Melbourne’s downturn had gathered pace over the second half of last year.
“Another more than 1 per cent decline over the month really does highlight that this market isn’t turning around. There’s no sign at the moment that the market’s anywhere near bottoming out,” he said.
“The silver lining there is affordability is improving.
“But we need to see values fall further or wages rise before we see affordability return to healthy levels in these markets.”
The CoreLogic report said dwelling values in Victoria’s capital were now “back to January 2017 levels”, with the affluent top-end of the market still leading the slump.
Melbourne’s inner-east has copped the biggest annual fall in home values of Australia’s capital city regions, plummeting 15 per cent.
The inner-south, down 11.7 per cent, and outer-east, down 10.4 per cent, weren’t far behind.
The city’s top quartile as a whole has shed 12.4 per cent over the year, and 13.8 per cent since the market peaked.
Victoria’s regional markets continue to resist the doom and gloom, with strong yearly growth notched in Ballarat, up 8.2 per cent, Latrobe-Gippsland, up 8 per cent, Geelong, up 6.2 per cent, and Bendigo, up 4 per cent.
But values in Melbourne’s broader lower quartile have dipped 0.8 per cent.
“The lower valuation brackets have benefited from higher demand from first-home buyers, as well as tighter lending conditions for borrowers with higher debt-to-income ratios,” Mr Lawless said.
“(But), although the more affordable brackets across Sydney and Melbourne (saw) some resilience to falls early in the decline phase, it’s clear all segments of the market in Australia’s two largest cities are losing value.”
Multiple property data firms have forecast further declines for the Melbourne market this year, with NAB tipping a 7 per cent drop in house prices and Propertyology, a 5-8 per cent fall in house and unit values combined if there are no changes to the lending conditions that helped drag prices down in 2018.