UDIA Victoria Media Release
Melbourne’s housing market is rebounding rapidly from the market correction that ran from late 2017 to mid-2019, indicates research presented in Melbourne today to the Victorian Division of the Urban Development Institute of Australia (UDIA Victoria).
CoreLogic and ANZ data presented at UDIA Victoria’s 2020 Outlook Research Breakfast showed Melbourne house values have risen by 11.9% since finding a floor last year, while unit values are up 9.9%. Based on the current rate of growth, Melbourne housing values are expected to exceed previous peaks in the coming months.
“The state-wide conversation is focused back onto how far and how fast house prices will rise,” said UDIA Victoria chief executive Danni Hunter.
“As we expected going into 2020, new housing supply is tight. Advertised housing supply levels remain low, and dwelling approvals are coming off a low base, while our population growth continues to lead the nation. We know that constrained housing supply coupled with high housing demand equates to serious housing affordability challenges for purchasers, investors and renters.
“Fortunately, building approvals are lifting,” she said.
The research shows early signs that the residential construction
pipeline is improving.
“While unit commencements have fallen sharply, unit approvals were up in late
2019 which could see a gradual lift in medium and high density commencements
later this year. Considering the longer lead time for medium to high density
projects, we could be facing a supply shortage in this sector later this year
or in early 2021,” said CoreLogic Head of Research Tim Lawless.
“The challenge is to ensure approvals continue to stabilise and that they translate into real supply in the wake of several headwinds such as global uncertainty surrounding the coronavirus and domestic challenges including recent bushfires in Victoria,” said Ms Hunter.
While the coronavirus is expected to have a significant impact on the Australian economy, the effect on the property sector is harder to predict.
“Coronavirus may impact the property sector through reduced foreign buyer demand. But we should keep in mind that the presence of foreign buyers has already halved from the peak back in 2015/16. Back when SARS hit in 2002/03, Chinese tourist arrivals rebounded almost as quickly as they fell. The hope this time would be that the same recovery occurs across all affected parts of Australia’s economy,” said ANZ Associate Director of Property Daniel Gradwell.
The data shows population growth remains a key driver of the housing market.
“The Federal Government’s reduction of permanent visas was well-publicised, but a lesser known fact is that other types of immigration were increased, meaning the most recent Budget forecast a 17% rise in immigration,” said Mr Gradwell.
“Not many people would know about that, making it very hard to prepare properly in terms of providing infrastructure, including housing,” he said.
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