Melbourne experienced its strongest property market in seven years in 2017, with this price growth driving many first homebuyers out of CBD-adjacent areas and into the surrounding suburbs and regional areas.
According to the Real Estate Institute of Victoria (REIV), house prices in metropolitan Melbourne rose for the seventh consecutive quarter in December 2017, up 1.1% to a median of $821,000. This growth is understood to have slowed in December due to increased supply and reduced investor activity.
Despite this slowed growth in the last quarter of 2017, Melbourne saw more than 25 auction records broken in 2017, and its annual price growth grew to 13.2% in 2017 – the highest since 2010 – in part due to high levels of interstate and overseas migration, new Government initiatives for first homebuyers and record low interest rates.
Melbourne’s apartment market also grew, with the citywide median price increasing 1.2% to $594,500 in December 2017.
In Melbourne’s outer suburbs, the median house price increased by 2.4% over the quarter to $666,500 in December 2017. In regional areas, house prices grew 2.6% in the December quarter to a record high $396,500 – an annual increase of 10% on the same period the previous year.
REIV president, Richard Simpson, said that demand for houses in Melbourne’s most exclusive suburbs (including top performers such as Toorak, South Yarra, Surrey Hills and Canterbury) is continuing to outstrip supply, with increased competition delivering exceptional results for vendors in these areas.
“Increased participation from owner-occupiers is driving values in the city’s outer suburbs, with these areas offering buyers the ideal combination of affordability and space.”
“Strong price growth over the past year has meant that houses within 20km of the CBD are almost out of reach for many first homebuyers. These buyers are now looking for new entry points to the market, especially in established suburbs with infrastructure, amenities and services.”
“Regional cities and towns within commuting distance of the CBD have certainly benefitted from strong price growth in Melbourne with a number of these areas now recording median house prices higher than those in the outer ring.”