The latest data has not been kind to Melbourne’s housing market, where losses are accelerating.
Melbourne’s auction clearance rate has crashed to levels not seen since the 2011-12 correction:
The weekend’s preliminary clearance rate was just 55.7% – 20% below the same weekend last year and certain to fall into the low 50s once some of the 150 missing auction results are reported:
Next, value losses are accelerating. So far this month, Melbourne’s dwelling values have fallen by a hefty 0.63%:
Whereas Melbourne’s quarterly losses have accelerated sharply to 2.2% – the biggest decline since January 2012:
Melbourne’s housing market is now easily the weakest in the nation, eclipsing both Perth and Sydney:
During the 2010-2012 housing correction, Melbourne dwelling values declined by 8.4% peak-to-trough. Dwelling values have so far declined by only 3.5% since November 2017. And given the much wilder overvaluation this time around (see next chart), we should expect a lot more downside.
A 15% to 20% peak-to-trough correction for Melbourne is on the cards, with the market probably not bottoming until late-2020, assuming Labor’s negative gearing and capital gains tax discount comes into effect as promised next year.
