Melbourne - price growth stalls while a rental crisis emerges
Median house prices in Melbourne peaked in December 2021 at $ 960,000 and have now come back 5.2 per cent since that date . They ’ re now where they were in mid November 2021 , highlighting how quickly the market was moving at the end of last year .
The market slowdown is no doubt a relief for many people . First home buyer activity hit a peak in Victoria in 2020 but pulled back significantly last year as the market surged ahead . Most sellers are subsequent buyers and the hot market was a stressful one to sell and then buy in . From March 2020 when the first lockdown was announced to the end of December , Melbourne house prices increased by 30 per cent . Melbourne residents may have been locked down for most of this period , and overall population declined , but demand for houses surged ahead .
The slowdown at this point is unbalanced with the city ’ s most expensive suburbs seeing declines in pricing , perhaps driven by high mortgage rates . Interestingly , cheaper suburbs are , in the main , still recording year on year increases . It ’ s possible that continued high levels of investor interest is keeping activity higher at these price points , driven by sharp rises in rents . Investors may not get the same level of capital growth this year as occurred last year , but rental growth is currently very strong .
While prices jumped 30 per cent through the pandemic , rents pretty much remained stable . But while prices have come back this year , rents have risen eight per cent for houses and 13 per cent for units . This sharp rise is set to continue as international migration starts up again . We ’ re also heading to a housing shortage - Melbourne is always good at supplying housing but the current construction crisis will force down the supply of new homes .
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