Melbourne house prices plummeted $32,000 over the three months to June, recording the steepest quarterly fall of all the major capital cities, new data from Domain has revealed.
The 3.5 per cent slump marks the first fall since early 2019, and bucks Melbourne’s recovery from the 2017 to 2019 slump.
Unit prices held up better than house prices, falling $9,000 on average (1.7 per cent) as the impact of the pandemic took its toll.
And Domain’s senior research analyst, Nicola Powell, warned that things will only get worse for Melbourne as some businesses begin to no longer qualify for the JobKeeper payment, and the JobSeeker boost is more than halved.
“Home owners have been provided with a lifeline during this economically challenging time through the intervention of the banks and government – the JobKeeper subsidy, as well as a more generous JobSeeker payment, which have both been extended, along with the banks offer to pause mortgages,” Powell said.
“These will minimise the number of urgent or distressed sales, which will in turn support prices. The risks become far greater once these initiatives cease.”
But Powell flagged if June is anything to go by, further price falls are on the horizon.
"In June 13.4 per cent of sellers reduced their asking price, five times higher than the same time last year."
And while Powell was hopeful the state’s property market would rebound after restrictions eased, the second lockdown has stalled its recovery.
Rentals have fallen too, with inner-city Melbourne house rents dropping $40 per week, and units $35 per week. Advertised rentals also surged 64 per cent from March to June.
“This has created a discounting war, forcing one-third of inner Melbourne landlords to slash asking rents in an attempt to secure a tenant,” Powell said.
Sydney recorded a median house price drop of $23,000, and units plummeted just over $14,000, according to the report.
The fall interrupts Sydney’s upswing, which had seen house prices rise 10.5 per cent annually.
House prices still remain $110,000 above the early 2019 trough, but remain $55,000 below the mid-2017 peak.
Again, Powell credits the relative stability of Sydney house prices to the government’s significant stimulus packages, like JobKeeper.
She expects further declines too.
“The proportion of properties discounted is a leading indicator of price movement, evidence that further price weakness lies ahead.”
Rental prices similarly tumbled in Sydney, by as much as $50 a week in the city and eastern suburbs and $40 in the northern suburbs, according to Domain research.
“Tenants are in a strong position to negotiate prices or seek out cheaper properties,” Powell said.
House prices in Adelaide, Hobart and Canberra actually increased, bucking the downward trend exhibited by the nation’s larger cities.
The median house price is now $553,036 in Adelaide, $819,090 in Canberra and $529,388 in Hobart.
Are you a millennial or Gen Z-er interested in joining a community where you can learn how to take control of your money? Join us at The Broke Millennials Club on Facebook!