Insights

The Melbourne real estate market in the September 2024 quarter has shown resilience amidst fluctuating economic conditions. Property prices have continued to rise modestly, driven by sustained demand, particularly for houses in the middle and outer suburbs. As population growth rebounds post-pandemic, the demand for family homes, especially in Melbourne’s growth corridors like the western and south eastern suburbs, has increased. However, apartment markets in the inner city remain softer, reflecting a slower return of overseas students and young professionals.

Interest rates, although stabilising after a series of hikes, have kept pressure on affordability, leading to an increase in rental demand. As a result, vacancy rates are historically low, and rental prices have surged. This has particularly impacted tenants in Melbourne’s inner suburbs, where rental properties are scarce and competition is fierce.

Investors have slowly returned to the market, lured by the strong rental yields, but first-home buyers face significant challenges due to rising property prices and lending constraints. Auction clearance rates have remained strong, hovering around 70%, signalling continued buyer confidence despite broader economic uncertainties.

Development activity has slowed slightly, with builders grappling with labour shortages and rising construction costs. Nonetheless, Melbourne’s infrastructure projects and suburban sprawl continue to provide long-term growth potential for the property market.

Overall, the Melbourne real estate market remains balanced, with steady price growth, high rental demand, and ongoing development underpinning its appeal to both investors and homebuyers