Melbourne property price falls not as bad as 2018 predictions
Melbourne’s market correction fell short of dire predictions last year.
While some of the nation’s biggest data providers and banks flagged almost 10 per cent losses to house values in 2018, new figures from the Valuer-General, the authority on the state’s median house prices, show in reality they fell $37,500 (4.9 per cent) to $732,500 across 2018.
CoreLogic and NAB warned of house value losses last year at anywhere from 9.1 per cent to 8 per cent.
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Those bank and data firm figures reflect indexed values, a theoretical figure applied to all homes in the city irrespective of whether they were actually sold, while the Valuer-General’s price-based figures tally only those that actually sold.
Real Estate Institute of Victoria vice-president Adam Docking said despite the dire forecasts “the reality isn’t bearing it out”, and the discrepancy reflected sellers refusing to accept losses at the predicted levels.
“(Last year) there were people saying ‘I’m not going to sell my house for that, because it was worth more than that last year’,” Mr Docking said.
“And that’s a good thing. The market generally takes a nose dive when people have to sell.”
It also showed homeowners couldn’t assume their property would follow the city’s median house price, with significant losses recorded in Melbourne’s pricier suburbs and modest reductions in affordable postcodes.
The Valuer-General figures show South Yarra was the city’s worst hit, with its $1.6 million median house price having fallen 30.4 per cent from $2.3 million at the end of 2017.
At the other end of the scale Cairnlea to the city’s west rose 12.5 per cent to $807,500, Botanic Ridge in the South East grew 10.4 per cent to $751,000, Gisborne in the north was 17.9 per cent better off at $785,000, and Mt Martha on the Mornington Peninsula jumped 16.5 per cent to $1.27 million.
“In a transitioning market you have to be more specific to suburbs than Melbourne wide,” Mr Docking said.
“Even when the market was trending up 20 per cent, it wasn’t in every street.”
Market analysts at realestate.com.au had also questioned the severity of predictions, with their house value index showing a just 2.5 per cent reduction across last year.
Realestate.com.au chief economist Nerida Conisbee said in addition to a lower reduction, they had also tracked higher demand for homes advertised for sale in Melbourne than Sydney.
“Sydney wasn’t tracking well at all, but Melbourne wasn’t dropping off at the same rate,” Ms Conisbee said.
“So that was another data point backing up what we were seeing in the index.”
The discrepancy between indexed home values and the actual changes to median home prices should encourage homeowners to find out what was actually happening in their local area and to look for broader signs of trouble for the housing market.
“The market tends to do really badly when people are losing their jobs, and this cycle we haven’t seen people losing their jobs,” Ms Conisbee said.
Both the REIV and realestate.com.au are seeing signs that the property market has turned a corner since the federal election.
“On our site, there was a big jump in activity in Melbourne and Sydney in the week after the election,” Ms Conisbee said.
“By the end of June we will start to see Melbourne flatten out.”
She estimated the market would still take a while to recover, with growth expected to be capped at 3 per cent across the coming financial year.
“Buyers do have time to get back into the market, we won’t go back to the panic-like market in 2017,” Ms Conisbee said.
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The Valuer-General figures are considered the state’s most reliable for house prices, and while they take six months to calculate, they capture 93 per cent of all sales via the State Revenue Office — which oversees stamp duty on all property purchases.