Powered by momentummedia
nestegg logo
Powered by momentummedia
Powered by momentummedia
nestegg logo
nestegg logo

 

 

Invest

Why is Melbourne property falling more than everywhere else?

  • July 07 2020
  • Share

Invest

Why is Melbourne property falling more than everywhere else?

By Cameron Micallef
July 07 2020

The fallout from COVID-19 has seen Melbourne property markets fall by 2.3 per cent, making it the worst-performing capital city, new research has shown.

Melbourne

Why is Melbourne property falling more than everywhere else?

author image
  • July 07 2020
  • Share

The fallout from COVID-19 has seen Melbourne property markets fall by 2.3 per cent, making it the worst-performing capital city, new research has shown.

Melbourne

Numbers released in June by CoreLogic show that Melbourne has fallen by almost three times as much as Sydney.

“The results may be surprising, particularly when considering that the Sydney growth rate, which often moves quite closely with Melbourne property, was less than half this rate in the same period (at -0.8 per cent),” CoreLogic’s head of research, Eliza Owen, said.

“Data suggests that the Melbourne market has experienced a turn in its market before others. This was evident in the most recent upswing, where Sydney and Melbourne saw peak growth rates around November 2019, while other capital cities continued to see a more moderate but accelerating growth rate.”

Cyclically then, it is not unreasonable to see Melbourne values slip at a greater rate than other capital cities. CoreLogic also suggests that property markets where incomes are higher, households are more indebted and investor activity is high can be more sensitive to changes in the economy.

Advertisement
Advertisement

“High levels of investment are also evident in the Melbourne market, which may be contributing to volatility, though this is present in Sydney, too. ABS finance data shows investor lending has comprised an average 32.3 per cent of total mortgage lending across Victoria for the past five years,” Ms Owen said. 

Melbourne property markets may be disproportionately affected by demand shocks in employment and migration, with government figures showing it was hit hardest.

The ABS payroll data shows that Victoria fell by 7.6 per cent, compared with the national average of 6.4 per cent, for the week ending 13 June.

Comparison wise, Sydney’s payroll data fell by 6.1 per cent.

The Melbourne housing market has been the most exposed to demand from net overseas migration. Over 2018-2019, Melbourne had the highest level of net overseas migration, at 77,369. This accounts for 38.2 per cent of net overseas migration to Australia, according to CoreLogic. 

Finally, it is worth noting that in the coming months, a second spike in COVID-19 cases across Melbourne will be an added blow to the economy and housing market.  

“The longer businesses and households are subject to social distancing, the greater the impact will be on the housing market,” Ms Owen concluded.

Why is Melbourne property falling more than everywhere else?
Melbourne
nestegg logo

Forward this article to a friend. Follow us on Linkedin. Join us on Facebook. Find us on Twitter for the latest updates
Rate the article

About the author

author image

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

more on this topic

more on this topic

From the web

Recommended by Spike Native Network

More articles

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.