2021 has been a spectacular year for growth in Melbourne property with the REIV reporting YTD growth of 19.3% on average across Melbourne’s 283 suburbs.
Melbourne’s median house price has surged further beyond $1 million, despite the city being locked down – and the real estate market largely closed – for 90 days in the third quarter of 2021.
According to the latest Domain House Price Report, the median house price of the world’s most locked down city edged up by 1.6 per cent to a record-breaking $1,037,923 in the three months to September 2021. This certainly flies in the face of certain predictions at the start of the Covid-19 pandemic, where commentators and Bank CEO’s were predicting market losses of up to 30%.
With the lockdown now over and real estate agents able to host in-person inspections and auctions once again, Melbourne’s property market is showing signs of heating up at a rapid rate.
In the four weeks to October 17, Domain’s data shows Melbourne’s property listings have increased by a whopping 118.5 per cent, while the clearance rate from last week’s round of auctions sat at an impressive 76.3 per cent from 748 reported results.
Stephen Dullens, chief executive of Ray White Victoria and Tasmania, said the final quarter of 2021 could see housing prices reach even greater heights. “The number of new listings coming online at the moment is just massive – we’ve never listed anywhere near what we’re listing at the moment,” Mr Dullens said.
“Our clearance rate last week was 89 per cent, which was 100 per cent of our auctions [that were conducted]. So, all the signs are things are really, really strong, and when clearance rates are at that level, it tends to put upwards pressure on prices.”
Rental market
While rents in Melbourne continue to be slightly weaker compared to its other capital city counterparts, the reopening of the borders and the consequent increase in demand is seen to give the city’s rental market a shot in the arm.
At an annual rate, house rents in Melbourne rose by 4.5 per cent in October, slightly higher than the 4.4 per cent recorded in September. Meanwhile, unit rents managed to bounce back from the 1.2 per cent decline seen in September, posting a 0.2 per cent annual increase in October.
Vacancy rates
Melbourne’s vacancy rates declined in October, as improving economic and health outlook has prompted a rush of tenants to lease vacant rental properties.
According to Domain, the easing of lockdown in Melbourne caused a shift in the city’s rental market. Melbournians instantly reacted to the ability to conduct rental inspections, as vacancy rates fell from 3.5 per cent in September to 3.1 per cent in October, its lowest point since July 2020. The city is now just 0.4 percentage points off from its COVID-induced peak seen in April 2020.
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