A Comprehensive Review

In early 2022, the Reserve Bank of Australia increased the official cash rate by 25 basis points to 35 basis points, leading to an increase in mortgage interest rates. Nevertheless, due to robust market fundamentals and limited housing supply, the market has remained relatively steady: resulting in a balanced situation where the median sale price has plateaued.

CoreLogic reported that there was a significant decline in housing values, with a decrease of 9.1% recorded between May 2022 and February 2023. However, according to the index, there was a collective average increase of 0.5% in prices during the month of April, following a 0.6% rise in the preceding month of March.

As stated by Tim Lawless, Research Director at CoreLogic, it is becoming more evident that the housing market has reached a turning point, indicating a shift in its trajectory. “Not only are we seeing housing values stabilising or rising across most areas of the country, a number of other indicators are confirming the positive shift. Auction clearance rates are holding slightly above the long run average, sentiment has lifted and home sales are trending around the previous five-year average”.

Although sales volume fluctuates throughout the seasons, typically increasing during the spring/summer and decreasing during the colder winter months, accurately forecasting market trends is challenging. Various factors, including limited housing supply, population growth and rising interest rates, are influencing prices. However, it seems that inflation has reached its peak.

Despite potential challenges, the market in Melbourne appears to be resilient, as indicated by the consistent and solid auction clearance rates observed in the first quarter of 2023.