Melbourne’s auction clearance rate,a measure of how many scheduled auctions find buyers and a read on the health of the market,slipped to 62.1 per cent in the four weeks to June 2,CoreLogic figures show.
That’s down from 66.5 per cent in the four weeks to February 18 and it has been steadily edging lower. Melbourne’s decade average is 67 per cent.
Melbourne home values are 0.3 per cent lower than they were at the start of the year,a subtle downturn after tracking sideways in recent months.
But the market is patchy. In the outer east,almost 73 per cent of auctions are finding buyers,and 68 per cent in the inner east. But in the west and on the Mornington Peninsula,the figure has fallen below 60 per cent.
As the year began,hopes were high of an imminent cut to the cash rate that would have reduced buyers’ mortgage repayments. But any relief has been delayed,and some of the owners finding it hardest to manage their debts have decided to sell.
“The Victorian property market in particular has been a bit more sluggish,” CoreLogic head of research Eliza Owen said. Sydney home values are up 2 per cent over the year to date,while Perth has risen 9.7 per cent.
“Whether you’re looking at the auction clearance rate,the change in home values,or a surplus of listings building up across this market,I think it’s fair to say the buyer demand just isn’t there for the available supply.”
Migration trends have been less favourable to Melbourne,she said,as interstate migration was weak during lockdown and bottomed out at a loss of about 35,000 people in the year to June 2021. New arrivals from overseas have offset the losses,but are more likely to rent than buy at first.
She noted pockets of stress,such as a build up in homes for sale.
“You might infer in a high interest rate[environment] people are selling because they’re not dealing well with mortgage payments.”
She did not think the state’s increase in land tax had helped investor demand. The share of investment finance lent for properties in Victoria was about a third at the start of the pandemic,was already falling before the land tax expansion,and has dropped to about 20 per cent. Although rents have risen,.
On the other hand,Victoria accounts for about 35 per cent of first home buyer lending – the highest of the states.
SQM Research managing director Louis Christopher said the Melbourne property market is treading water and has been patchy this year.
Some markets within Melbourne are hotter than others.Wayne Taylor
Victoria has had a larger net interstate outflow of residents than other states while higher property taxes have discouraged investors,Christopher said.
“There’s definitely been a rise in listings in Melbourne over the course of 2024. We are above long-term average levels,” he said.
“Could be investors getting out of the market,looking at other options or just wishing to cash out given the elevated interest rates.”
Barry Plant chief executive Lisa Pennell said the more modest price growth in Melbourne than other states was offering an opportunity for first home buyers.
“We’re starting to see more and more first home buyer activity,” she said. “It’s so hard to get a rental property now and they’re so expensive for what you get,for a lot of would-be buyers that will push them into a purchase.”
But she said the higher land tax was a problem for investors,and more investors were selling than buying.
“That’s putting real pressure on rentals,in terms of prices and supply,” she said.
Point Cook home owner Robert Stojanovski and his wife Danielle of nearly 14 years to move closer to their daughter’s school.
Robert and Danielle Stojanovski,with daughters Chantel,Monique and Charlotte,are selling their home.Joe Armao
“We never really decided to sell until one of our neighbours sold their property in August last year and prices were quite high,” he said. “When they got a high price that’s when we really started to consider,is it a good time to sell our property.
“I still think it’s a good time,there’s still a lot of movement in the market.”
Stojanovski’s agent,Ray White Point Cook principal Amar Thakkar,said his area in the west had not been in either a positive or a negative trend over the past six months.
“We’re still seeing many groups come through,the average number of bidders is still relatively healthy,it’s just the outlook as far as price expectations,” he said. “Buyers haven’t got the confidence to bid as much as sellers would have hoped for.”