After the year-long trend of declines, Melbourne’s property market continued on an upward trajectory in April, reflecting the growth that was witnessed in both February and March.
Our capital saw 2,960 auctions occur across April, compared to 4,993 at the same time last year, marking a decline in volume of just over 40%. Low stock volumes have continued to be seen, which has likely contributed to the improvement of auction clearance rates, with Melbourne’s showing an increase for the third consecutive month, delivering the best result since October 2021. Bolstered property prices seen across the last quarter may also be attributed to the lack of listings, paying dividends for those who chose to go to market in what others felt was a period of uncertainty.
Supply and demand are also having an impact on Melbourne’s rental market. April saw a rise in vacancy rates for the first time in four months, rounding out the month at 0.9%; this result is due, in part, to a rise in the number of rental listings for the month. Whilst this increase may appear pleasing for those seeking rental accommodation, the number of rental listings is still down 53.9% annually. This continues to drive fierce competition for available properties, with renters paying a higher premium to secure a property. Domain reported at the end of the March quarter that rental costs had increased 11.1% year-on-year.
An increase in migration continues to be a driving factor in the tight conditions that the rental market is seeing; however, Tim Lawless from CoreLogic believes that the increase in overseas arrivals may also contribute to the results being seen in the sales space. He recently said, “While overseas migration would normally have a more direct correlation with rental demand, with vacancy rates holding around 1% in most cities, it’s reasonable to assume more people are fast-tracking a purchasing decision simply because they can’t find rental accommodation.”
Rental demand could too be credited to a lack of both investors and first-home buyers entering the market. Stabilisation of interest rates has the potential to drive increased purchasing from both groups, helping relieve some of the pressure that has been building steadily over the past 12 months.
Consumer sentiment should continue to improve as the RBA find a suitable balance between interest rates and inflation, and this should strengthen activity in both the buying and selling space.