Official statistics on Melbourne apartment prices are solidifying predictions of the property boom slowing in Melbourne.
Unlike the other cities around the country, Melbourne house prices fell 1.3 per cent for the month of November, with apartment prices falling even further, dropping by 3.2 per cent.
Across the country, house prices rose on average by 0.2 per cent and have jumped 9.3 per cent for the year.
The figures come from CoreLogic and their head of research Tim Lawless told The Australian Financial Review it was unit prices that were causing the drag on Melbourne’s house prices.
“It appears that higher unit supply is progressively weighing down the capital gains across Melbourne’s unit sector, with annual capital gains tracking at 3.9 per cent for Melbourne units compared with a 12.2 per cent annual gain in Melbourne house values,” he said.
“But after seeing a month of negative results, we need to see a few more months to see a trend in Melbourne.”
“At the moment it is a signal.”
The falling apartment prices look set to continue until 2018 while supply exceeds demand, at which time rising migration is predicted to increase demand to the point where rents start rising.
If you compare apartment prices between Melbourne and Sydney, you see a huge difference. Over the year, apartment prices in Melbourne have risen just 0.6 per cent while in Sydney they have jumped 10.6 per cent.
Melbourne’s house prices have been a different market to apartments, jumping 11.4 per cent for the year.
Mr Lawless told The Australian Financial Review it’s unlikely the housing boom will continue for much longer.
“Affordability constraints are creating high barriers to entry, particularly in Sydney, and lenders are becoming more cautious in their lending practices,” he said.
“The supply pipeline is substantial for inner-city units, which is likely to dampen value growth in these precincts as well as dent buyer confidence and push vacancy rates higher.”
With household debt at record levels, Australians are very sensitive to the cost of debt, and an expectation that the period of record low mortgage rates is approaching an end may reduce buyer demand.”