Bargain hunters target Melbourne housing

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Melbourne’s auction market has rebounded strongly, recording an average final auction clearance rate of 67% in May, the strongest result since mid-2023.

As illustrated in the following chart, the bounce in Melbourne’s auction clearance rate has been accompanied by a corresponding rise in dwelling values, which increased by 0.8% in May, according to PropTrack.

Melbourne auctions versus prices

The rising interest in Melbourne property makes sense, given it has become the cheapest major capital city market in the nation.

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The following table from PropTrack shows that Melbourne’s median dwelling value of $782,000 at 31 May was 11% below the capital city median and the lowest out of the five major capital cities.

Proptrack values

Melbourne’s relative affordability follows modest growth of only 17.6% since the onset of the COVID-19 pandemic in March 2020, versus 44.8% growth across the combined capital cities.

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Cotality’s dwelling values index shows similar results, with Melbourne’s median value of $791,303 as of 31 May tracking 13% below the combined capital city median and the lowest of the five major capital cities.

Cotality dwelling value index

Cotality has recorded only 12.8% growth for Melbourne over the past five years, versus 38.1% growth across the combined capital cities.

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As shown below, Melbourne’s growth over the past five years has been the lowest in the nation.

Cotality dwelling value change

Finally, Domain’s quarterly house price series shows that Melbourne’s median house price relative to the other capital cities is tracking at a cyclical low at a level not seen since the mid-2000s.

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Melbourne's relative valuation

The bargain hunters are moving in, which explains the strong bounce in auction clearances.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.