Melbourne’s property market looks to continue in the same direction for 2019, with another year of modest price falls, red tape on borrowing money and a continuing rise of housing developments appearing in the outer Melbourne suburbs. Experts are hoping the city’s surging population will put a floor under the declines as more new residents look for city based apartments and family homes.
The Melbourne residential market has seen five years of soaring house prices, a number of factors have lead to the current decline including the regulatory crackdown on bank loans and scrutiny of lending standards from the financial services royal commission. People’s expectations have been changed from expecting markets to keep going up to expecting markets to keep going down. We would say that sort of adjustment in Melbourne would still be quite predictable.The city of Melbourne now expects a peak-to-trough price fall of about 15 per cent, including a drop of about 7 per cent during 2019, with some suburbs performing better than others.
Prospective home buyers simply cannot borrow as much money now as in the past. This is going to reduce people’s ability to bid the prices a vendor might want to receive when selling their properties. We’re still going to find the market pretty tough for the next 12 months. Prices overall predicted to falls of 5 to 10 per cent for the next twelve months.
At the same time, 2019 could be a peak year for new apartment completions, with the significant construction pipeline giving buyers more choice. A boom in new detached housing is also underway and likely to peak this year. Victoria’s population is growing at a rate of approximately 2.2 per cent a year on official figures, is supporting a high level of demand for new city apartments. Immigration to cities from regional areas and abroad has resulted in people arriving in Melbourne and simply needing a roof over their head, rental vacancies are at low levels, so the new supply is needed. Most buyers will want to live within 10 kilometres of the city if they can afford it, and they want to live close to the top schools in Melbourne.
Next year a number of legal reforms will also be in focus. Reforms to tenancy law passed the Victorian parliament this year and will now be subject to a period of consultation before coming into effect in 2020. The changes are set to introduce basic standards, limit rent rises to once a year and support pet ownership. Separate changes to owners corporation laws will also give comfort to residents.