The Reserve Bank of Australia’s (RBA) 0.25% rate hike on Melbourne Cup Day has hit Melbourne’s housing market especially hard.
CoreLogic’s daily dwelling values index shows that Melbourne dwelling values have fallen by 0.3% over the past 28 days, down sharply from 0.4% growth in early November:
Melbourne’s auction market has registered a similar decline, with the final clearance rate plunging to 57% in early December, down sharply from 70% in June:
Buyer demand has clearly weakened in Melbourne on the back of 13 interest rate hikes from the RBA, which has reduced borrowing capacity by around 30%.
At the same time, investors are dumping their Victorian property holdings following recent state government policy changes. In turn, the numbers of homes listed for sale has surged:
“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”.
Indeed, Spachus Aus reported that “house listings in Melbourne have gone sky high from October this year. (In green). Currently 8568 house listings and 1810 apartments which have been steadily falling since August”:
Source: Spachus Aus
CoreLogic’s Monthly Chart Pack also showed that new listings in Melbourne have risen by 7.6% versus the same time last year, with overall listings 7.9% higher:
Source: CoreLogic
Melbourne is currently the worst performing major capital city market with respect to dwelling value growth.
Given the above data, it will very likely record further price falls in early 2024 and lead a milder national housing correction.
