Melbourne is one of Australia’s major property markets, and it has experienced turbulence over the past year. With the COVID-19 pandemic rattling the global economy, many investors and property buyers alike have been curious about whether the Melbourne property market is crashing. However, the situation is not that straightforward, and there are several factors at play.
Melbourne’s property market has been considered one of the strongest and most consistent over the years. However, like any other market, it is not immune to fluctuations, and prices have been on the decline since mid-2017. Nevertheless, the effects of the pandemic have had more far-reaching impacts, and it is essential to get a better understanding of the situation before making any conclusions about a market crash.
Melbourne Property Market Performance in Recent Times
Before diving into whether the Melbourne property market is crashing, it is essential to look at its performance in recent times. In 2017, Melbourne’s property market experienced its last peak, with prices reaching record highs. However, since then, the market has been on the decline, and in 2020, the pandemic disrupted the housing market further. As a result, property prices dipped even further as a response to the economic uncertainty caused by the pandemic.
Factors Affecting the Melbourne Property Market
The COVID-19 Pandemic
The pandemic has had a far-reaching impact on nearly every sector of the economy, and the housing market in Melbourne is no exception. Uncertainty caused by job losses, border closures, and a lack of demand for properties due to lockdown measures have affected the market’s performance. Melbourne’s lockdown measures have been some of the strictest in the world, limiting property inspections and property auctions, leading to uncertainty about the market’s future.
Supply and Demand
Supply and demand are fundamental factors that impact the property market. In Melbourne’s case, the significant construction boom seen in previous years has led to oversupply and increased competition among sellers. With a lack of demand, this has put downward pressure on Melbourne’s property prices.
Interest Rates
Interest rates are also an important factor that influences the property market. Low-interest rates typically lead to increased borrowing and increased demand. Conversely, high-interest rates discourage borrowing, leading to a decrease in demand. Currently, interest rates are at record lows, which has helped mitigate some of the effects of the pandemic on the housing market.
Government Policy
The Australian Government has implemented various policies that have impacted the property market in Melbourne. For instance, the first homeowner grants and stamp duty concessions have led to increased demand for properties. Similarly, the foreign investor property tax and tighter lending restrictions have led to a decrease in demand and an increase in property supply.
Is the Melbourne Property Market Crashing?
The Melbourne property market is currently experiencing significant price drops, but it is not necessarily a sign of a market crash. The economic disruption caused by the pandemic and increased supply have contributed to the market’s current state. However, as Australia gradually emerges from the pandemic, a more accurate picture of the market’s future trajectory will begin to reveal itself.
How to Navigate the Melbourne Property Market
Despite the current uncertainty surrounding Melbourne’s property market, there are still opportunities for buyers and sellers. Property prices have dipped, and it is a significant advantage for those looking to buy homes. Melbourne’s property market is cyclical, and a decline in prices will eventually balance out. Buyers should also take advantage of low-interest rates currently being offered by banks.
For those looking to sell their property, competitive pricing is essential. They will also require the services of an expert real estate agent who understands the market’s trends and can advise accordingly.
Frequently Asked Questions (FAQs)
What is the average property price in Melbourne?
According to Domain Group, Melbourne’s median house price is currently $872,934, while the median apartment price is $536,145.
What are the current stamp duty concession policies in Melbourne?
First home buyers are eligible for a stamp duty concession on property purchases valued at up to $750,000. There is also a 50% stamp duty concession for property purchases valued from $750,001 to $1 million.
Is it a good time to buy a house in Melbourne?
With low-interest rates and a decline in property prices, it is an excellent time to buy a house in Melbourne. Buyers should also take advantage of stamp duty concessions and first homeowner grants.
What is the process of buying a house in Melbourne?
The process of buying a house in Melbourne involves finding a property, negotiating the price with the seller or their agent, obtaining finance pre-approval, conducting building and pest inspections, and settling the purchase with the seller’s conveyancer.
Where can I find more information on buying a house in Melbourne?
You can find more information on buying a house in Melbourne by visiting Maz Real Estate’s Guide to Buying a House in Melbourne here.
Conclusion
The Melbourne property market has experienced significant fluctuations in recent years, with the pandemic exacerbating the housing market’s decline. However, the current state of the market does not necessarily mean a crash is imminent. Buyers and sellers should take advantage of the current low-interest rates, stamp duty concessions, and declining property prices, along with seeking expert advice from a real estate agent.
