2nd March 2021: Melbourne Real Estate: Australian Housing Market In Midst of Boom

Melbourne real estate: Australian housing market in midst of boom

Brought to you by Realestate.com.au - Samantha Landy

Australian home values have risen by their fastest monthly rate since 2003, putting the nation "in the midst of a boom" that's notably being buoyed by resurgent Melbourne and Sydney markets.

Nationally, houses and units stacked on 2.1 per cent in February, with CoreLogic's Hedonic Home Value Index attributing the increase to a combination of "record low mortgage rates, improving economic conditions, government incentives and low advertised supply levels".

"Australia's housing market is in the midst of a broadbased boom," the report said.

Victoria's capital was one of the country's strongest real estate performers last month, with house and unit values also rising 2.1 per cent in the city to a $717,767 median.

Melbourne is now just 1.3 per cent behind where it was a year ago, before COVID-19 hit.

Sydney and Hobart notched the largest growth in February, at 2.5 per cent, while values in all the capitals gained more than 2.7 per cent over the quarter, led by Darwin at 5.5 per cent. Melbourne's quarterly increase was a solid 3.5 per cent.

The nation's regional markets showed similar strength, leaving CoreLogic research director Tim Lawless to draw comparisons to the housing boom that followed 2008's Global Financial Crisis.

"The last time we saw a sustained period where every capital city and rest of state region was rising in value was mid 2009 through to early 2010, as post-GFC stimulus fuelled buyer demand," he said.

Jas Stephens auctioneer Tate Moore in action. Melbourne's auction market is roaring back. Picture: David Crosling.

He did question whether Melbourne and Sydney's new-found growth — a rapid turnaround from a lacklustre 2020 for the cities — could be sustained, with affordability issues bound to return.

"Both cities are still recording values below their earlier peaks. However, at this current rate

of appreciation, it won't be long before Australia's two most expensive capital city markets are moving through new record highs," he said.

"With household incomes expected to remain subdued and stimulus winding down, it is likely affordability will once again become a challenge in these cities."

Mr Lawless said a "sense of FOMO" — fear of missing out — continued to be a major factor in spurring housing markets across the country, as buyer demand well outweighed available housing supply.

Despite the number of properties advertised for sale nationally being down 26.2 per cent on a year ago, the volume of quarterly home sales was up a whopping 35.3 per cent on 2020 levels, according to CoreLogic.

"These conditions favour sellers," he said.

"Although new listings are likely to track higher over coming months, if buyer demand continues to lift, it's likely overall advertised stock levels will remain low."

Mr Lawless advised serious buyers to obtain loan pre-approval so they could be "ready to act fast".

227 Bastings Street, Northcote, recently notched a speedy sale worth $2.87m.

Jellis Craig Northcote director Sam Rigopoulos said houses in his patch were regularly flying off the market in "three, four or five days" as buyers with a "real thirst for change" after months in lockdown made offers too good to refuse.

A five-bedroom house at 227 Bastings Street, Northcote, notably earned $2.87m within a day of being offered to the market. Just 18 months earlier, it had crawled to a $2.5m sale after passing in at auction.

"There are a lot of new buyers, mixing with pent-up demand from buyers from last year, and it's creating a very strong market. It's moving at a pace I haven't seen before," he said.

"People are looking for a change of scenery. And they have access to cheap funding (with interest rates so low), so lots of tenants are looking at their rent and saying, 'for this money or not a lot more, I could become an owner'."