Where the Melbourne property market stands at three-quarter time

Nathan Mawby

02 OCT 2018

How is the Melbourne market placed after nine months?

THE 2018 house and apartment selling season has been the closest contest in six years.

While sellers have been the undisputed premiers since 2013, homebuyers have been mounting a comeback this year — and it’s accelerating in the second half.

Clearances outside 50 per cent are getting tighter as the city’s auctioneers increasingly handball homes to the private sale market after they pass in.

But there are a few pockets still on the mark for contested possession.

With the 2018 selling year’s third quarter now over, we’ve asked a handful of Melbourne property experts to tackle the highs and lows to date.

It’s been a year of change in the Melbourne property market. Picture: David Caird


There’s no question that the rookies have stepped up this season, according to realestate.com.au chief economist Nerida Conisbee.

Stamp duty concessions and grants for new homes have ensured first-home buyers have dominated suburbs across the city, diving into play for houses, townhouses, units and apartments below the $750,000 mark.

“We can tell from finance approvals that they are getting their homes and as a result cheaper suburbs are doing quite well,” Ms Conisbee said.

CoreLogic figures show that the top eight suburbs for median value growth for the year to the end of August were almost all affordable options.

Melton houses topped the list with a 28.8 per cent lift in the median value to $424,416. But only two of the suburbs in the eight were above $620,000.

CoreLogic Victorian head of real estate Geoff White said against a backdrop of a softening market, the figures were very encouraging for homeowners in the area.

“To get 25 per cent plus growth in these areas is pretty amazing given that generally the market is softening,” Mr White said.

Regional cities close to Melbourne, from Geelong to Ballarat and Bendigo, were also kicking goals off the back of the first-home buyer uptick, according to Ms Conisbee.



Meanwhile, the bottom of the ladder is headlined by some of the wealthiest suburbs in the city — reflecting the typical ripple effect where the top of the market moves first.

Canterbury’s $2,554,945 million median house value has fallen 19.8 per cent, CoreLogic figures show.

Hawthorn’s season has also been rough with a 13.3 per cent reduction meaning it just scraped into the bottom eight. Though for most of the elite suburbs struggling to get a kick at the moment there had been a reduction in the number of quality homes in the past 12 months, Mr White said.

Real Estate Institute of Victoria auction chapter president Adam Docking said the international investor market definitely wouldn’t be collecting any votes from this season.

“That has really slowed down,” Mr Docking said.

Equally slow have been homes above the $1 million mark, particularly as concerns over future rises in interest rates bite.

“The $1 million mark used to be a spring board up, and now it’s a ceiling everyone is banging their heads on,” he said.

Ms Conisbee noted some investors were nervous about the change of Prime Minister, which had raised concerns a Labor government could soon be in a position to follow through on suggestions they would alter negative gearing policies.



Barry Plant chief executive Mike McCarthy added that for all the doom and gloom about falling house prices, Melbourne’s middle and outer suburbs hadn’t given up all that much ground to date.

And with the exception of apartment driven markets like South Yarra and Melbourne’s CBD, it was these areas that had achieved the most disposals for the year.

In the past 12 months, Pakenham has notched an astonishing 1182 house sales.

“It’s been a good first three quarters for the middle and outer suburbs in terms of holding prices,” Mr McCarthy said.

“And if you look at places like Werribee, Tarneit and Pakenham, they are still performing really well.”

The outer and middle ring of Melbourne was also where owners held their position the longest, upwards of 19 years in both Wantirna and Clayton South.

On the auction front, Melbourne’s clearance rate might have taken a hit across the course of the year, but there were a few forward pockets still kicking goals, according to Geoff White.

Gladstone Park and Parkville are still hovering above 80 per cent, while six more suburbs have kept the figure above 75 per cent.

“And it’s very encouraging if you are living in those areas,” Mr White said.

The change in play across the year was best measured by the number of disposals at auction, with Melbourne’s clearance rate just north of 50 per cent at this point in spring — but above 60 per cent earlier in the year.

“Over the course of the year it’s highlighted that the market is changing,” Mr White said.



The final quarter would be where most buyers and sellers come to grips with the new market, according to Mr McCarthy.

“A big chunk of the industry hasn’t been through a market like this, if you haven’t been in it or owned a home for more than five or six years, you won’t have been through this,” Mr McCarthy said.

“I think it’s probably moved more into a buyers market now, and I think that’s more because sellers haven’t adjusted their thinking. But the pendulum is about to ease back to equilibrium as everyone gets their head around the market.”

Mr Docking said he was expecting buyers would get more choice early on in October, but it would not be a flooded market.

“I think we will finish the year on a high, but nowhere near as high as it’s been in the last few years,” he said.

He encouraged anyone thinking of selling to do so as soon as possible, with the Melbourne Cup not far off — and Christmas, the final siren, closing in behind that.

Mr White said it was too hard to split the pack and he expected buyers and sellers would end the year close to a draw.

“It is very balanced, there’s probably only a kick between the two sides,” Mr White said.

AFL stars kicking property goals

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Clearances (best clearance rates)

Gladstone Park — 83 per cent

Parkville — 82 per cent

Fitzroy — 77 per cent

Kingsbury — 77 per cent

Balaclava — 77 per cent

Kensington — 76 per cent

Keilor — 76 per cent

Middle Park — 76 per cent

Holding the man (hold periods)

Wantirna — 19.3 years

Clayton South — 19.1 years

Springvale South — 18.6 years

Vermont South — 18 years

Rosanna — 16.9 years

Bulleen — 16.6 years

Oakleigh East — 16.5 years

Surrey Hills — 16.4 years

The top eight (value growth)

Melton $424,416 — 28.8 per cent

Mickleham $526,398 — 27.3 per cent

Narre Warren North $1,171,585 — 26.7 per cent

Sanctuary Lakes $619,996 — 26.7 per cent

Kurungjang $447,328 — 26.3 per cent

Campbellfield $532,601 — 25.2 per cent

Carrum Downs (units) $459,122 — 25.2 per cent

Balnarring $878,068 — 25.2 per cent

The bottom eight (value loss)

Canterbury $2,554,945 — -19.8 per cent

South Melbourne $1,208,602 — -17.8 per cent

Sandringham $1,666,959 — -16.1 per cent

Malvern $2,305,931 — -16 per cent

East Melbourne (units) $583,531 — -15.9 per cent

Middle Park $2,388,224 — -15.4 per cent

South Yarra $1,463,724 — -13.8 per cent

Hawthorn $1,889,534 — -13.3 per cent

Most disposals (sales)

Melbourne (units) — 1273 sales

Pakenham — 1182 sales

Point Cook — 832 sales

Werribee — 785 sales

Southbank (units) — 740 sales

Berwick — 726 sales

Tarneit — 708 sales

Sunbury — 691 sales