Over the year 2018, Domain’s December house price report found that Sydney was leading the housing downturn with 9.9% declines, and Melbourne close at its heels with an 8.4% decline. In researching a pattern in the softening 2018 housing market, Domain mapped Melbourne’s housing decline over its four quarters.
In March 2018, it was found that the inner-east suburbs of Melbourne were among the first to present a decline in prices. In particularly, St Kilda and Brighton were suffering, declining about #% over the year at that point. State-wide, peak growth rates were pushed out to the outer regions of Melbourne, while the inner suburbs, such as Glen Iris and Camberwell presented with a slowdown in growth rates. Outer regions, on the other hand, were enjoying annual increases of more than 20%.
Over the June 2018 quarter, price growth flattened around Kew, Camberwell and Glen Iris. More expensive suburbs continued to decline, and by this point, the inner west was also beginning to be affected by the price falls. And despite sustaining an annual growth of 20%, Melton’s quarterly growth also showed signs of weakening from a peak 8% growth in the March quarter to 3% in the June quarter.
The September 2018 quarter saw continued declines in the west. Prices had plummeted in the east by now, with Toorak prices down 20% annually and 8% in the quarter. The inner west, on the other hand, had been displaying flat/negative quarterly price changes since the start of 2018—but by September, Port Melbourne, Yarraville and West Footscray were suffering annual price falls. Overall, ¼ of Melbourne’s suburbs were seeing falls in housing prices.
In December 2018, the falls only accelerated. There was a rapid outward spread of the suburbs impacted with price falls, and over the quarter, the 25% of suburbs seeing price declines had risen to more than 50%.
Overall, the pricing decline appears to have affected Melbourne’s inner east first, before slowly spreading to the inner west. These are expensive suburbs close to the CBD. The decline then continued to move outward from there, spilling over into the relatively affordable areas.
This suggests that though the more expensive suburbs have led the decline, other suburbs follow at a lag and are not exempt from the housing decline. It indicates that the outer regions of Melbourne may yet see continued declines that mirror those of the inner suburbs’ few months prior. As the housing downturn eases, however, it can also be expected that the inner suburbs will experience renewed price growth first. (ET)