The time to strike for first-home buyers could be right now during this rare period of property market weakness in Melbourne.
Decline in Melbourne's Median House Prices Presents Opportunity
Melbourne’s median house price dropped another 1.5 percent in the September quarter, reaching $1,024,000, with the median unit price at $572,491, according to the Domain House Price Report. The city’s median house price is now nearly $70,000 below its peak in 2021, offering a strong entry point for first-home buyers before prices potentially rebound.
Favourable Market Conditions and Increased Supply
First-home buyers are benefiting from favorable conditions, including a significant supply of properties and high interest rates putting downward pressure on house prices. Increases to land tax have also pushed many Melbourne investors to sell, adding more properties to the market and further reducing prices.
Westpac senior economist Matthew Hassan told Domain.com that the higher costs of holding an investment property have led to a spike in low-quality investment property sales, often ideal for first-home buyers.
Rising Activity Among First-Home Buyers
Domain’s chief of research Nicola Powell noted that first-home buyers currently make up 22.4 percent of new loans, above the decade average of 18.6 percent, reflecting a shift in buyer activity. Buyers are increasingly waiting for a rate cut, creating a temporary pause in demand and an accumulation of supply, which gives active buyers more leverage.
Median Unit Prices Increase as Affordability Drives Demand
Melbourne’s median unit price rose by 0.5 percent in the September quarter, bridging the price gap with houses to a three-year low. Houses remain 79 percent more expensive than units, down from 89 percent in 2023. This narrowing gap has strengthened demand for units, as affordability continues to be a significant driver for buyers looking to enter Melbourne’s property market.
Capital City Median Property Prices (September 2024)
| City | Houses (Sept-24) | Units (Sept-24) |
|---|---|---|
| Sydney | $1,654,668 | $815,258 |
| Melbourne | $1,024,243 | $572,491 |
| Brisbane | $994,945 | $610,321 |
| Adelaide | $973,336 | $536,180 |
| Canberra | $1,081,227 | $565,288 |
| Perth | $894,842 | $466,548 |
| Hobart | $709,945 | $520,241 |
| Darwin | $592,976 | $330,559 |
