By Guest Blogger, Terry Ryder, founder,
hotspotting.com.au and propertyU
Melbourne has lagged other major cities on price growth in 2023 but that is set to change, with major momentum building in the city’s residential market.
Boosted by nation-leading economic growth and a construction boom, the Melbourne property has undergone a significant resurgence in the past six months and is set to deliver higher price growth in 2024.
CoreLogic price data suggests that Melbourne in the year to date has under-performed Sydney, Brisbane and Perth (which have all risen 10%-plus since the start of 2023, compared to Melbourne’s 4%.
But Melbourne’s rate of price growth is starting to improve on the back of a big uplift in sales activity in the past two quarters.
Melbourne has evolved from a struggling market to a boom one in the past six months and is now a national leader on growth momentum, based on Hotspotting’s analysis of sales activity.
Almost half of the suburbs in Greater Melbourne are now classified by Hotspotting’s Price Predictor Index as rising markets and 87% of them have positive rankings (rising, consistency or recovering).
This represents a massive transformation from the situation just six months ago. Our quarterly surveys show that in that time the number of rising suburbs has increased from 12 (six months ago) to 58 (three months ago) and now to 142 – with rising markets increasing from just 4% of suburbs six months ago to 47% now.
Suburbs with positive rankings have increased from 33% to 73% to 87%, while the number of suburbs with negative classifications has dropped from 201 (six months ago), to 71 (three months ago) and 38 now.
Six months ago, 67 suburbs in Greater Melbourne were categorised as declining markets; now there are none.
This return to a market characterised by high buyer demand is seen right across the Greater Melbourne area, with the exception of the Mornington Peninsula.
The City of Melbourne, which includes the Melbourne CBD and near-City suburbs, is thriving – but so too are Middle Melbourne precincts like the Whitehorse LGA and the Monash LGA, as well outer-ring areas such as the City of Casey in the far south-east, Wyndham in the far south-west, Melton in the far west and Whittlesea on the northern fringe of the Greater Melbourne area.
Earlier this year we identified the City of Melbourne as a national leader of an emerging trend of rising buyer demand for inner-city apartments.
This survey has confirmed the strength of this market: the 10 City of Melbourne suburbs in our analysis include nine rising and one recovering markets.
The neighbouring City of Yarra also has busy markets, with four rising and two recovering suburbs among the seven in our analysis. The Hobsons Bay LGA also has a strong local market, led by the suburbs of Altona, Altona North and Newport.
Melbourne’s resurgence has come on the back of an uplift in the Victoria state economy. The CommSec State of the States report published in October 2023 ranked Victoria as the strongest economy in the nation. It ranked first overall and first on the specific metrics of construction work and economic growth.
Melbourne and Victoria have been boosted since international borders re-opened, allowing the return to inflows of overseas migrants and foreign students, both of which have major impacts on the city’s property markets.
Two years ago, Melbourne had the highest residential vacancy rate among the state and territory capital cities, at 3.5%. A year ago, it had dropped markedly to 1.5% and now it’s around 1.2%, according to SQM Research.
SQM’s Weekly Rents Index for Melbourne has risen 19% for houses and 14% for apartments in the past 12 months.
All these indicators suggest Melbourne is heading into a boom market and is likely to deliver higher growth in property prices in 2024.
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