Most buyers and sellers take a long-term view of the Melbourne property market, which is now rebounding and defying the uncertainty caused by consecutive interest rate increases.

New data from the real estate analyst group CoreLogic shows that national property values lifted 2.3 per cent over the three months to May, but house and unit medians in some suburbs have climbed at quadruple the rate.

CoreLogic Australia Head of Research Eliza Owen says the rise in values in Melbourne is due to more buyers competing for fewer homes, as the population grew amid a drop in homes for sale and new housing supply.

“Melbourne is getting the population boost it would have gotten during the pandemic if the city wasn’t in lockdown,” Ms Owen says. “It’s really the growth cycle Melbourne missed out on during the pandemic.”

CoreLogic’s national Home Value Index has recorded a third consecutive monthly rise, with the pace of growth accelerating sharply to 1.2 per cent in May.

After finding a floor in February, home values increased 0.6 per cent and 0.5 per cent through March and April respectively.

Melbourne dwelling values currently sit 9.6 per cent below their early 2022 price peak.

The fall in values has been nowhere near the drastic predictions of those forecasting a 15-20 per cent plunge from 2022 peaks.

Melbourne’s strong auction clearance rates in recent weeks – above 70 per cent – is another market indicator that has defied interest rate hikes by the Reserve Bank of Australia in May and June.

Why? Because price fluctuations do not significantly impact the vast majority of homeowners unless they are struggling to refinance, need to sell right now or their property is in negative equity.

If you take a medium-to-long-term view of property – and most buyers and vendors do – then short-term fluctuations in values are not necessarily a worry.

The long-term outlook for Melbourne real estate is apparent and positive. In the past 20 years, house prices in every Australian capital city have either doubled or trebled.

CoreLogic says Melbourne house values fell by -6.7 per cent between March 2020 and October 2020, before surging 20.6 per cent through the growth cycle. House values subsequently fell by -11.2 per cent, finding a floor in February this year. Since February, Melbourne house values have risen by 1.7 per cent to the end of May 2023.

Ms Owen notes that like many economic trends since the pandemic, the housing market has defied expectations: “With continued strong demand from a surge in overseas migration, a slow return to pre-pandemic household size in the capital cities, and persistently low levels of advertised supply, the June rate hike may only serve to take some steam out of the recovery trend in housing values, rather than reverse recent gains.”

A house or apartment’s most critical role is not financial. A property provides shelter, room for a family to grow and the freedom to modify or change a home to best suit your needs.

It’s little wonder that public transport links and a sense of community offered by specific suburbs and locales are driving factors for many buyers, under-pinning their long-range approach to property.

Perron King, Melbourne-based Director of the national property valuers Herron Todd White, says purchasers are increasingly taking into consideration the position of a property in relation to public transport links, particularly in the larger eastern capital cities of Melbourne, Sydney and Brisbane.

“Being within a five to 15-minute walk of a metro rail station, agents tell us, is becoming a popular purchasing factor for the full range of suburbs, both inner and outer, as our cities continue to grow and road traffic becomes increasingly congested,” Mr King says.

“Rail access not only provides a link to the CBD hub from home, but access to other parts of a city, be they significant sporting grounds or to friends and family located in other suburbs.

“Many cities and major regional centres have their own unique neighbourhoods built on a sense of community. Areas such as bohemian Fremantle in Western Australia, Brunswick in Melbourne and cosmopolitan Marrickville in Sydney are draw cards for purchasers who want to live amongst a like-minded community.”

According to CoreLogic, a low rate of new property listings is likely to be a key feature of capital city property markets for the foreseeable future.

In the four weeks to June 4,  the volume of new listings totalled 30,583 nationally. New listings have seen a seasonal descent in recent weeks, and remain -16.2 per cent below the previous five-year average.

Total listings are still markedly lower than the previous five-year average due to the relatively low volume of new selling decisions, against a normalising in sales volumes.

The combined capital cities clearance rate rose strongly through May, averaging 70.5 per cent in the four weeks ending May 28. This is up from an average final clearance rate of 60.6 per cent in the same period of 2022.

Please contact a Nelson Alexander office to obtain further information on buying and selling in the current market.