A new report is forecasting Melbourne’s median house price will surge more than $110,000 to an almost $1.16m record high in the next 18 months – the equivalent of $200 a day.
Property industry analyst and economic forecaster Oxford Economics Australia (OEA) is predicting the city’s $1,047,300 median house value from December 2023 will soar to $1,157,700 in June 2026.
The organisation’s senior economist and report author Maree Kilroy said this would surpass Melbourne’s previous $1,105,900 peak median of December 2021.
And the Residential Property Prospects report shows the capital’s median unit price is anticipated to increase 6.5 per cent to an all-time $726,900 high.
However the outlook is less action packed for the next 12 months, with median house values set to rise just 0.7 per cent to $1,054,600.
Ms Kilroy said clearance rates were trending downwards and many investors selling due to increasing state government land taxes.
“The Melbourne market is not running hot,” Ms Kilroy said.
“Competition for properties is not as hot, more choice on the market means buyers aren’t trying to outbid a bigger pool of competing buyers.”
But a resurgence in migration from both interstate and overseas will drive price recovery from mid-2025.
In contrast PropTrack’s Property Market Outlook Report is projecting a jump between 1 and 4 per cent for Melbourne’s median house price this year estimating it could reach more than $950,000, a sum more modest than OEA’s numbers.
Real Estate Institute of Victoria president Jake Caine said he expected Melbourne’s median values to remain stable this year, with units continuing to outperform houses.
Mr Caine said borrowers who could have borne the expense of a $1m mortgage before the nation’s 13 interest rate rises – applied between May 2022 and November 2023 – would now likely only to be approved for a $600,000 loan, increasing competition for more affordable homes.
“For everyone who gets priced out and pushed down into a lower price bracket, that in turn pushes someone else down,” Mr Caine said.
Out of the nation’s big four banks, Westpac is expecting Melbourne property prices to rise 3 per cent in 2024. NAB puts the figure at 5.5 per cent.
ANZ senior economist Adelaide Timbrell said research predicted the city’s housing prices would surge 3-4 per cent.
“A more balanced interstate migration picture as well as strong overseas migration will be a positive for Melbourne housing prices, Ms Timbrell said.
Commonwealth Bank head of Australian economics, Gareth Aird, said national property values would climb 5 per cent, with Melbourne prices set to come in lower “until a circuit breaker in the form of interest rate cuts” from the Reserve Bank of Australia, possibly in September.
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