Melbourne Property Market News: Apartment and House Price Gulf Widens
The price of detached houses and apartment units in Melbourne has experienced a widening effect following the conclusion of 2020. Despite the impacts of COVID, the median price of a standalone residence in the City of Melbourne increased by $3,600 per week during the last three months of 2020. House values reached a record median price of $936,000 in December – a figure 64% higher than the median apartment price, according to Domain’s house price report. Historically, the price gap has been around 52% over the last decade.
In contrast to the housing market, Melbourne’s high-density accommodation has been struggling to retain its value during the coronavirus pandemic. This was described in Pillar Financials’ previous blog post. The ‘disturbed’ and ‘over-supplied’ market means apartments are more likely to sell at a loss, while houses are predicted to experience significant growth over 2021.
Senior research analysts at Domain have said it’s been a “rare” observation over the past 30 years to see house and apartment prices moving in different directions.
The reason for declining apartment prices may be due to weakened investor activity across Australia recently. High-density apartments close to the city centre tend to be preferable as investments compared to houses. Such properties offer close proximity to work and affordable living for people who travel for work. However, during the COVID crisis, the widespread occurrence of working from home arrangements mean there is less demand for convenient accommodation and demand has been driven instead to outer suburban and regional locations as buyers seek affordability, liveability, space and greater value for money.
Not all apartments blocks have fallen in value. Owner occupiers are still exhibiting demand for low-rise apartments and flats built during the 1970s, but medium and high-density inner-city ring apartments have been very disturbed. Rents are falling and there’s limited support for such stock.
The effects of COVID, too, have not been all-encompassing in terms of their negative effect on the price of housing. The outer ring of the city of Melbourne, for example, demonstrated excellent growth during COVID-19; in-line with government stimulus and a shift to working from home. Experts say that there is a high level of pent-up demand in Melbourne because of the city’s lengthy lockdowns which have severely limited buying and selling activity.
Pillar Financial will continue to keep an eye on the Melbourne property market and will keep our readers updated with any relevant news or investment opportunities we come across. If you are looking to enter the Melbourne property market in any capacity, contact our professional team by calling 1300 730 309, Monday to Friday, 9:00am to 5:00pm.