Are Melbourne property prices flattening?

The Melbourne property market has rocketed to unprecedented levels during the pandemic-impacted period, experiencing remarkable growth over the preceding 12 months. As the bustling property activity of springtime gradually transitioned into the festive summer season, the housing market appears to have found a degree of stability. Will we see a flattening out in 2022, or will there still be growth?

Banks, real estate agents, and financial experts agree that the increase in property values in Melbourne over the past 12 months cannot continue. Melbourne saw a 14.9% hike in property prices in the 2021 calendar year, yet the rolling quarterly change was a 0.8% rise to January 2022, showing that demand is slowing, but it is also in line with the yearly housing cycle. For the month of January, Melbourne’s prices actually fell by 0.2%, which is due to the quality of properties on the market, the reduction of properties on the market, and the need for agents and real estate professionals to have a physical break after the mental rollercoaster of the past two years.

As we move into “Covid-normal”, the government incentives and handouts have come to an end, reducing the stimulus that was driving the record prices in the Melbourne property market. The urgency to change one’s lifestyle, such as upgrading a home for more space, moving intrastate or interstate to avoid local politics, or adopting a work-from-home lifestyle, has decreased. We will see 2022 return to the regular reasons for buying and selling – the five “D’s” – death, divorce, debt, downsizing, and distance, as well as family growth, which will see a levelling effect on property prices.

However, there is already a sign of the return of overseas investors as well as local investors keen to capitalise on the student and short-term rental markets. The CBD Retail Association is expecting some reprieve when the international borders open on February 21, 2022, and this will also make a huge impact on the interest in Melbourne’s property market. As we move through February, with school going back, better quality property available, and investors gaining more confidence, we will see a rise in the housing pricing cycle that will set the standard for the year.

With the announcement by the Reserve Bank of Australia on February 1, 2022, to maintain the record low interest rate (0.10%), there is still confidence that we will see a small but steady price rise in property in the foreseeable future. For more assistance with your property needs, be sure to speak to our friendly team at Besser & Co.