Are Melbourne property prices flattening?
The Melbourne property market has soared to new heights over the recent pandemic-affected years, with record increases over the past 12 months. As the change of activity between the onslaught of Spring simmered into the holiday season of Summer, there seems to be some stability in house prices. Will we see a flattening out in 2022, or will there still be growth?
The consensus between the banks, real estate agents and financial experts is that the rise of property values in Melbourne over the past 12 months can’t be sustained. 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 2 years.
As we move into ‘COVID-normal’, the government incentives and hand-outs have come to an end, reducing the stimulus that was driving the record prices. Those who wanted to change their lifestyle by upgrading their home for a sense of space, moving intrastate or interstate away from the local politics, or those moving to a work-from-home lifestyle have done so, so the urgency to make these moves has reduced. 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 market. 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 1st February 2022 to maintain the record low interest rate (0.10 per cent), 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 and Co.