Melbourne property prices hit new high

Melbourne property values were hardest hit by the COVID-19 downturn.

According to CoreLogic’s daily dwelling values index, Melbourne property values declined 5.9% between mid-March and 18 October 2020, but have since rebounded strongly, gaining 6.7% since then (see next chart).

Melbourne dwelling values

After falling heavily during COVID, Melbourne dwelling values have fully recovered.

As at Sunday 28 March 2021, Melbourne’s dwelling value index was 158.66, which is 30 points (0.19%) higher than the prior all-time peak of 158.36 recorded on 6 April 2020.

This comes after Melbourne dwelling values have risen 2.2% so far over March 2021, which is already the strongest monthly growth since October and November 2019, as well as 2009 (each 2.3%). Given there are still three days left in the month, these monthly peaks are certain to be broken at March’s end.

The momentum is obviously set to continue given the strong rebound in Melbourne’s auction clearance rates:

Melbourne auction clearance rate vs price growth

The big rebound in Melbourne’s final auction clearance rate is pointing to strong price growth.

New mortgage finance commitments have also rebounded strongly across Melbourne:

Melbourne mortgage demand vs price growth

The rebound in Melbourne mortgage demand is pointing to strong price growth.

Both indicators – auction clearance rates and new mortgage demand – have historically been excellent leading indicators for price growth, as shown clearly in the charts above.

Therefore, the immediate outlook is for Melbourne dwelling values to experience ongoing strong price growth over the foreseeable future.

We will know that prices are likely to slow once these two indicators start to weaken.

Unconventional Economist

Comments

  1. Treating investment like a game of monopoly has worked brilliantly for most people over 30 years now, so why would they rationally think it’s going to stop?

    Policymakers had the chance to deal property investors a genuinely painful experience last year, instead they threw the kitchen sink at the economy, blowing out the deficit and debt level, saddling the RBA with a war chest of assets and weakening bank asset quality. They’ve behaved exactly true to form.

    • happy valleyMEMBER

      And gone this time a whole lot of extra miles down the road of moral bankruptcy to be at the finish line – just waiting for Josh’s irresponsible lending regime to get up later this year and likewise ScoMo’s international borders opening. Captain Phil has exceeded his KPI and deserves a decent bonus.

  2. pfh007.comMEMBER

    Is anyone surprised by this?

    How many times have people demanded that RBA provide “stimulus” and “support” by manipulating interest rates lower and the result has been a further inflation of residential housing asset prices.

    The only difference this time was the idiotic argument that this time cutting interest rates and offering special lines of credit TFF to the banks was about making Australia more competitive via a lower AUD.

    That was always a ridiculous theory with zero basis in reality.

    Cutting interest rates, QE and TFF had a single objective and it has been achieved.

    Does anyone really expect finance sector folks trained in the status quo not to demand that it continues regardless of the cost?

      • pfh007.comMEMBER

        “..was about making Australia more competitive via a lower AUD…”

        Only recently have the RBA started to refer to the AUD impact of QE and when they do may vague and occasionally reference to it they reek of “fig leaf” in the absence of any other rationalisations that don’t sound embarrassing.

        There is a good reason why the RBA did not talk about using QE to manipulate the exchange rate and that is because Central Banks are not supposed to be targeting the exchange rate in the era of free market / free capital flow fundamentalism.

        Now if you would like to go back to fixed exchanged rates (which would be surprising considering your criticism of the RBA pursuing a fiat “gold standard”) there are easier ways of doing that but all of them involve re-regulating banking and finance.

        Could you explain which parts of banking and finance you would like to re-regulate?

        Interest rates for loans secured by existing housing/land?

  3. Ritualised Forms

    Prices are simply insane across the board.

    I bought a place in the burbs of Geelong in mid 2016.  It made sense for us (a family) but I thought the moment I bought I would get the correction and experience having wasted a massive amount of dough.  Well that hasn’t happened.  I watched as places both sides were sold on the expensive end of the spectrum, and assumed that the Covid outbreak would knee prices in the nuts.  Well the price comparison sites tell me that I would probably get circa 50%  more for a joint I thought was overpriced when I bought it, an agent walking the streets a couple of weeks back called about the same figure.  Geelong is gooing gangbusters off the back of people deserting suburban Melbourne.  It has no jobs apart from bullshido jobs and public sector contracts, and bubble jobsfor tradies and sellers into the burgeoning suburbs.

    I still think sometime there must be a knee in the cojones and a reset of Australian RE prices.  Whether that reset is experienced though nominal prices or is adjusted through an Australian dollar that takes the knee is the question I have. I am wondering if I could sell out now in Geelong, buy somewhere cheap offshore, and relax while waiting for the mother of alll speculative bubbles to pop.  But the moment I do that I know the RE prices will shot off into the stratosphere.

    What a completely insane dynamic.

    • boomengineeringMEMBER

      Seems to be a drawn out version of tulip mania, that is, ours is following the same pattern but frustratingly slower. It wasn’t until after the prices went hyperbolic that it crashed. One tulip bulb would be the same price of a house. I’ve mistakenly called the top earlier but that average house in Curl Curl selling for 6.3M sealed the deal to stay well away.
      Maybe I should see if they will do a swap, house for tulip.
      Or bring a tulip to the next auction.

    • Geelong is 6% down on 12 months. And is DOWN from where it was in 2017.

      Your anecdata is just that – personal anecdote – reality is entirely different.

      I watch Geelong like a HAWKE, have lived there, worked there and currently operating two of the states biggest programes in that region – and house prices are in serious trouble.

      The entire city is overwhelmed with tradies from the development regions from Point Cook through to outer geelong suburban expansion to the Torquay link – ALL of them and their wives are buying and flipping with a coat of paint.

      That entire region is being operated on the back of Job Keeper – no one can catch a wave from Jan Juc to Wye River because its infested with people on Job Keeper – that all finishes tomorrow – and the place is going to burn.

      Geelong more than any other place is facing a housing disaster of epic proportions.

      https://sqmresearch.com.au/asking-property-prices.php?postcode=geelong&t=1

      Property listings are also going ballistic – which means things are going from bad to worse.

      https://sqmresearch.com.au/total-property-listings.php?sfx=&postcode=3220&t=1

        • No, because that would destroy his/her narrative. As much as I’d like to agree with this person. It simply hasn’t happened. I’m sure at some time it will, but as you said. Will be be nominal or real prices? I suspect the currency will get it in the neck first.

          • David Jonstone

            Why don’t YOU look at the graph he has posted – 3 Bedroom houses are BELOW what they were in 2017, as I said in my post – he has literally proven me right and you and him wrong – what the actual phuck mate.

            Eitherway – the link also shows the drop in prices for the past 12 months – talk about agenda – I have shown you the data, he has posted a link confirming I am right – but you still just choose to believe your own spruik.

            Delusional.

        • David Jonstone

          Sorry posted below :

          Yes – 3 bedroom houses are BELOW what they were in 2017 – as I stated, very clearly – along with the price falls for the last 12 months.

          You have literally just posted something which 100% confirms my post. In more ways than one – you have NO INTEREST in actual data and are purely agenda.

  4. Melbourne just needs another Covid wave lockdown, maybe a nice mutant strain, to remind people why you don’t want to live there and you certainly wouldn’t buy a property there.

  5. Arthur Schopenhauer

    A Developer neighbor has just had his long running company go into receivership. He’s packed the house and is heading north. Mixed signals.

    Edit: And very silly prices.

  6. ChristopherMEMBER

    Places are still flying out the door in Melbourne’s South West. This boom has a long way to run still.

  7. David Jonstone

    Yes – 3 bedroom houses are BELOW what they were in 2017 – as I stated, very clearly – along with the price falls for the last 12 months.

    You have literally just posted something which 100% confirms my post. In more ways than one – you have NO INTEREST in actual data and are purely agenda.