Australia’s house prices are among the highest on record, with the Melbourne property market the fifth least affordable worldwide. Will things change in 2023?
Like the rest of the Australian property market, house prices have boomed due to the Covid pandemic and rising interest rates. However, the outlook in 2023 will see an end to rapidly rising house values, already going down by 6.4% since February 2022. We will also see a steady shift from a seller’s to a buyer’s market.
If you’re looking to invest in the Melbourne property market this year, here is a guide to the Melbourne real estate market in 2023.
Key Takeaways:
- Buyer demand will decrease, meaning Melbourne property owners could need to sell at a lower price.
- The median house price in Melbourne is still $147,000 above pre-Covid levels.
- House prices in Melbourne are still the third highest in Australia.
How will rising interest rates affect Melbourne?
Australians are seeing some of the highest interest rates in ten years, with the RBA increasing interest to 3.1% in December 2022. Because of this, the Australian property market is likely to take a big hit since buyers are less likely to make property investments due to mortgage costs. So, if property owners want to sell in 2023, they might need to lower their property prices.
The Melbourne housing market will likely take a hit, but less than other areas. According to experts, the Melbourne property market will fall to pre-Covid levels, having increased by 21% throughout 2020.
Will house prices rise or fall?
House values in Melbourne have already fallen by around 8% throughout 2022 but are still 10% above pre-Covid levels. In 2023, thanks to rising interest rates, Melbourne property prices are likely to fall further still, although by significantly less than other Australian property prices.
Despite Melbourne property prices falling rapidly, the median house price is still $147,000 higher than pre-Covid levels. Melbourne is still ranked the 15th most expensive place to live in the world, with many suburbs part of the million-dollar club.
Melbourne house prices are still the third highest in Australia.
What will the median house price be in 2023?
Rising interest rates will cause a significant decrease in Melbourne’s median house price, forecasted to fall a further 6% in 2023.
Experts predict the median house price will be $836,809, while the median unit price will likely sit at $719,400.
While property investors will likely take advantage of falling prices, the average buyer is less likely to buy a new home in 2023 since mortgage rates are rising due to interest rates.
House prices will likely fall to pre-Covid levels, however, the Melbourne property market will still rank as one of the most expensive in the world.
What will the rental market look like?
While the median house price is set to decrease in 2023, Melbourne’s rental market will likely reach record-high levels, having already gone up by 19 to 21 % in 2022.
Rent is rising at the fastest pace ever recorded, with one tenant in the CBD area claiming their rent has doubled, going from $330 a week in early 202o to $650 by the end of 2022.
Should I invest in the Melbourne property market in 2023?
Although Melbourne house prices are set to go down in 2023, the longevity of the Australian property market is strong. The property market will likely see a bounce back in coming years, and rent is set to increase significantly throughout the year, having already gone up by around 20%.
If you’re still unconvinced, here are the top reasons why you should invest in the Melbourne property market in 2023
Melbourne’s population demographics
Melbourne’s population growth is unprecedented, with over 4.9 million people making it their home – and it isn’t hard to see why. Melbourne holds the title of the world’s most liveable city. With stunning parks, coastal locations, and an abundance of restaurants, it’s a haven for Australians. The property market reflects this, taking on average 39 days to sell a Melbourne property.
By 2030, experts predict Melbourne will rank as Australia’s largest city, and Melbourne’s housing market will likely grow significantly as the Australian economy returns to a new normal.
If you decide to invest in a property in 2023, house prices will likely grow again in the future.
Melbourne’s transport links
Melbourne has fantastic transport links, meaning residents in the outer suburbs can easily reach the city centre. Because of this, house prices in these suburbs will likely grow as the area gentrifies.
Popular outer suburbs likely to see significant growth include Melton, Cobblebank, and Kurunjang, with median house prices sitting below $500,000.
The median house price in Melton is the cheapest in Melbourne, currently at $410,000.
Melbourne’s economy
More and more people are attracted to Melbourne due to the sheer number of new jobs available, with over 500,00 created in Melbourne over the last decade. Thanks to strong job growth, house prices will likely continue to increase as more people move to the city.
Need investment advice? Consult Lendstreet Mortgage Brokers
We are your trusted local mortgage broker, ready to advise you on the Melbourne housing market. We offer a wide range of loans, from first home buyer loans to investor loans and refinancing.
Contact Lendstreet and start your home buying journey today. You can also book a free consultation here or email us at support@lendstreet.com.au.
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FAQs
Is the Melbourne housing market changing?
Yes, but not as rapidly in other areas. Increasing interest rates in Australia is lowering buyer demand, and property prices are set to fall by 6% in 2023.
How high are interest rates in Australia?
Interest rates are currently at 3. %, predicted to rise to 3.85 % in June 2023.
Will property prices stay the same in Australia in 2023?
Due to increased interest rates, Australian property prices will likely go down in 2023. In the capital cities, it is unlikely that all covid-19 growth will be undone.
What are the lowest property prices in Victoria?
The lowest property prices in Victoria are in Melton, Kurunjang, and Melton South.
What are the highest property prices in Melbourne?
The highest property prices in Melbourne are in Toorak, Canterbury, and Kooyang.
Which capital cities in Australia are the most expensive to live in?
The most expensive Australian capital cities to live in are Sydney, Melbourne, and Brisbane.
What are the median property prices in the Australian property market?
The median house price of Australian property in the capital cities is $869,604.
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