End in Sight for Melbourne House Price Pain

Victoria is tipped to become “the place to be” once more, with key market indicators expected to improve for the first time in 10 quarters.

The state is finally expected to reach positive interstate migration which experts say could to put an end to softer housing conditions.

Corelogic data showed capital cities across the country had double-digit growth since the onset of the pandemic with the exception of Melbourne which increased 1.6 per cent.

House values were 19.2 per cent cheaper in Australia’s second biggest city compared to Sydney in March 2020 and had ballooned to a 30.3 per cent difference by April 2022.

However, these “sluggish conditions” could give Melbourne an attractive affordability advantage, coupled with positive interstate migration and supply effectively ending the city’s struggling market.

Melbourne house price comparison

^{^ Source: Corelogic}

Corelogic executive research director Tim Lawless said Melbourne was in a more competitive position to attract a greater share of housing market participants.

“The city’s advertised supply level is trending lower and is 13.4 per cent below levels at the same time last year and 7.0 per cent below the previous five-year average,” Lawless said.

“Melbourne’s rental vacancy rate of 0.8 per cent in May is also one of the lowest in the country and yet another potential factor supporting purchasing demand for those with the financial capacity to enter the market.”

The main barrier to improvements in Melbourne’s housing market would be the impact of rising interest rates on supply and buyer borrowing capacity.

However, an influx of more than 1.5 million migrants into Australia over the next five years could boost demand for both build-to-sell and build-to-rent apartments across all cities.