Market snapshot – June 2022

The Melbourne property market has continued where it left off towards the end of 2021. In the first half of 2022 prices have either stabilised or in some cases reduced after the upward trajectory that occurred during the covid period of 2020 and 2021.

Currently, properties situated in blue chip locations in quality streetscapes with scarce and unique features are attracting multiple buyers, lesser properties are taking longer to sell and have lost some of their value.

This is a typical scenario after a period of rising prices. At the end of an upward price cycle quality properties hold their value whereas properties situated in secondary locations are corrected downwards in price. 

Melbourne’s auction clearance rate has continued to decline in the first six months of 2022. It is currently between 60 per cent and  65 per cent.

Victoria’s rental vacancy rate fell to 3.8 per cent in May 2022. The proportion of vacant properties in metro Melbourne went down to 4.7 per cent while regional Victoria rose to 1.7 per cent. A balanced rental market is considered to be a vacancy rate rate of 3 per cent.

Following the Reserve Bank meeting in June 2022, the cash rate has been increased by 50 basis points to 0.85 per cent, the largest monthly rate hike since February 2000.

The Australian economy is holding up well with  Gross Domestic Product (GDP) rising 0.8 per cent in seasonally adjusted terms in the March quarter 2022 and up 3.3 per cent through the year, according to figures released by the Australian Bureau of Statistics (ABS). 

According to the ABS, the seasonally adjusted unemployment rate for Australia remained at 3.9 per cent in May 2022 as employment increased by 60,600 people (0.5 per cent). The increase in May 2022 was the seventh consecutive increase in employment, following the easing of lock down restrictions in late 2021.

The Australian consumer price index (CPI) rose 2.1 per cent during the March quarter. Over the twelve months to the March 2022 quarter, the CPI rose 5.1 per cent. The most significant price rises were new dwelling purchases by owner-occupiers (+5.7 per cent) and automotive fuel (+11.0 per cent).

For the remainder of 2022 I don’t see any significant price increase in the Melbourne market. As always that small percentage of quality property i.e. properties in blue chip locations with scarce and unique features will appreciate however other properties will not show any significant movement in price. 

This means that buyers can approach the buying process without the added pressure of worrying about fast rising prices. Buying property is one of the most important decisions of a person’s life. There is not an easy solution for a less than ideal selection as buying and selling costs are substantial, it certainly pays to be discerning. Also, because prices have stabilised it will be much easier to value a property as against when the market is in a rapid state of change.