CoreLogic’s daily dwelling values index shows that Melbourne home prices are now falling following the Reserve Bank of Australia’s (RBA) 0.25% interest rate hike last month:
The decline in Melbourne dwelling values has been matched in the auction market, with the final clearances rate falling to 58% in the first week of December from a peak of 70% in May:
Westpac’s latest Housing Pulse contends that Melbourne’s budding housing correction is also being driven by an “investor sell-down” following recent state government policy changes.
“The changes include new land tax charges for investment properties that come into effect from 2024 but are couched as temporary measures to reduce the state’s ‘COVID debt'”.
“New listings have surged 25% since the state budget in May, listings of units up by over a third. With turnover only up slightly by 2.5%, the market balance has tilted sharply with an overhang of unsold stock now running at 4.4 months of sales (5.3 months for units)”.
“Houses and ‘top tier’ segments have seen more of a slowdown. Notably, annual growth is much weaker than in other major capitals”.
“Physical supply remains relatively tight but not quite as tight as in other markets”.
CoreLogic’s Monthly Chart Pack supports these findings, showing that new listings have risen by 7.8% versus the same time last year, with overall listings 7.8% higher:
For these reasons, Melbourne is the worst performing major capital city market with regards to home value growth.