MELBOURNE

Victoria

In 2022, Melbourne was ranked the tenth most liveable city in the world by The Economist Intelligence Unit. This follows seven consecutive years as number one. This performance can be attributed to world class healthcare, education and infrastructure, along with the city’s cultural diversity, environment and of course Australia’s political stability.

The Melbourne property market has been one of the strongest and most consistent performers over the last four decades. House price growth has ebbed and flowed over the course of the property cycle but the long-term performance has been outstanding with median house prices increasing by 8.9% per annum and apartment prices increasing by 6.7% per annum.

Although the Covid related lockdowns endured by Melbourne have proven challenging, the market has turned the corner with the return of both buyers and sellers. Consumer confidence and auction clearance rates have both improved and this is beginning to be reflected in price with houses increasing by 17.4% in the 12 months to June 2021. Uncertainty around inflation and rising interest rates has since slowed the rate of price increases. Nevertheless, we remain in the early stages of a macro bull run in property on the East Coast.

2.1

Population & Demographics

The population of Greater Melbourne was 5,150,766 as at 2022. The population growth rate has been near the top of any Australian state or territory with a pre-pandemic growth rate of 1.6%. This translates to an average of 120,000 residents added per year.

The growing population requires an additional 45,000 new dwellings per year. With a growth rate outstripping Sydney over the past decade and it is set to become Australia’s most populous city by 2026.

Assessing the population structure and how this may change in the future is critical to understanding where property demand will come from. The current household size is 2.7 people. However, the fastest growing cohort is lone person households. This suggests that future demand will most likely skew towards medium and high-density property types.

As of June 30th, 2022, lone person households and coupled families without children make up 49% of Greater Melbourne’s population. By 2031 these household types are expected to increase to 59%.

Rising prices for detached dwellings have strained affordability with a resultant spill over of demand into medium and high density dwellings.