Residential property prices in Victoria have recorded their largest increase in two decades, spurred on by low interest rates and government incentives, the Real Estate Institute of Victoria says.
House prices in Melbourne increased by 9.5 per cent from the September quarter to a median $941,000 despite the city battling two waves of Covid outbreaks.
Units in metropolitan Melbourne achieved a median price of $639,500 to be 2.5 per cent higher than the September quarter and record an annual increase of 3.8 per cent.
Despite Melbourne home values still being 4.1 per cent below their March 2020 peak, activity has bounced back across the state, with an estimated 29,500 transactions recorded across the December quarter—following the lifting of intensive lockdowns in October.
REIV president Leah Calnan said the Victorian property market has remained remarkably resilient in 2020, buoyed further by support measures such as JobKeeper and mortgage repayment holidays, which had sustained the market.
“Throughout the July and September quarters, we received constant reports of low listings and activity.
“Once restrictions across the state eased, demand and buyer competition skyrocketed.
“Certainly low interest rates and government incentives including stamp duty concessions and first home buyers grants added to buyer appetite for the December quarter, while volatility and uncertainty in the Australian equity market have secured property as a preferred investment option for Victorians.”
Melbourne's house prices currently sit at levels similar to those of early 2017 with prices expected to take another eight months to reach a new high, if the current growth trajectory remained consistent.
Victoria median prices
|Metropolitan Melbourne||Dec-20 Quarter||Sep-20 Quarter||Quarterly Change||12 months to Dec-20 Quarter||12 months to Dec-19 Quarter||Annual Change|
|Unit and Apartment||$639,500||$624,000||2.5%||$635,000||$612,000||3.8%|
|Regional Victoria||Dec-20 Quarter||Sep-20 Quarter||Quarterly Change||12 months to Dec-20 Quarter||12 months to Dec-20 Quarter||Annual Change|
|Unit and Apartment||$342,500||$331,000||3.5%||$325,500||$295,000||10.3%|
^Source: REIV-December Quarter 2020
Regional Victoria also saw traction in the market, recording its highest quarterly growth since 2003 as city-dwellers fled urban environments for the relative safety and space of country living.
Regional houses achieved a median price of $485,500, recording a 9.2 per cent increase from the September quarter, and 7.5 per cent annual growth.
While regional unit prices recorded a 3.5 per cent quarterly increase, they are now 10.3 per cent more valuable than they were 12 months ago.
Corelogic head of research Eliza Owen said across the September quarter the portion of profit-making sales increased more rapidly across the regions than capitals.
“Regional Victoria was the most profitable ‘rest of state’ region with 97.5 per cent of dwellings sold for a profit in the three months to September.
“With record low mortgage rates, a faster than expected economic recovery and relatively low cases of Covid-19, profitability is tipped to trend upwards over the coming quarters,” Owen said.
The picturesque Grampians, in Victoria's west, recorded the biggest leap in house prices—rising 16.6 per cent in the year to December.
Victoria's Surf Coast has also been directly impacted by the influx of new residents and renters the with an official rental vacancy rate of zero.
According to Corelogic, Victoria's Surf Coast houses sold for almost 6 per cent more on average in December 2020 than they did one year earlier in December 2019, officially pushed the region's average house price over the $1 million mark.
Owens said the substantial rise in property prices in regional Australia during the pandemic could now see many town's affordability decline.
“The combined regional Australian market saw the rate of profit making sales increase 150 basis points, to 89.2 per cent in the September quarter, while the rate of profitability across capital city markets expanded 30 basis points, to 87.2 per cent.
“This also reflects the divergent performance between regional and capital city real estate markets through 2020.”