Melbourne house prices have had one of the most usual periods we have ever seen thanks to the second lockdown period across Victoria.
The second wave of COVID has caused a dramatic fall in the number of transactions we’ve been seeing, with buyers not able to access properties and auction activity ground to a halt.
Longer-term, we also know that Melbourne is coming out of a period where it had seen incredibly strong growth in house prices. Values had been trending higher since 2007 and that growth only finally started to slow in 2017.
However, as we look towards the forecasts for what will come over the next few years, we might already be starting to see a bit of a change in trend, with more interest in semi-regional areas than we have ever seen before.
That is likely to show through with a number of LGAs located well outside of the Melbourne inner-ring areas, potentially set to be strong performers in the next two years.
With lockdowns now set to ease and businesses across the state hoping to reopen, there is likely going to be plenty of pent up demand from buyers and with listings still low, that could flow through to a number of areas performing strongly in the months ahead.
Melbourne Prices in 2020
Despite the COVID enforced lockdowns and the Victorian economy grinding to a halt, property prices have remained resilient.
This is clear by the fact that all the LGAs within and surrounding Melbourne area have seen levels of growth that range between -3.6% and +1.6%. The areas that have been most impacted have been the inner-city and CBD areas that have a large reliance on students and the tourism industry.
Over the last 12 months on a suburb level, we have seen some very strong performing suburbs, however, it’s important to note that transactions have been limited.
Balnarring Beach 3926 +16.66%
Balnarring Beach has seen incredibly strong price growth over the last 12 months, however, it must be noted this is on low transaction numbers. That said, the trend here is clear at the moment, that suburbs that are located away from the CBD are becoming more appealing in the short-term.
Balnarring Beach has grown in value by 16.66%, and HtAG has assessed this suburb as medium confidence.
This is clearly a higher-end suburb with the median value currently $2.13 million. While the suburb has seen a long period of growth, the growth rate is likely to fall from the highs we’ve seen over the past 12 months.
The data is assessed as medium confidence due to the low number of sales in the suburb. To access the latest HtAG forecasts with high confidence, subscribe to one of our plans.
Don Valley 3139 +13.32%
Continuing with the same trend we’ve been seeing, Don Valley was another strong performer over the past 12 months growing at 13.32%.
Don Valley is also located a long way from inner-city Melbourne and has a median price of $1.02 million, however, we have only seen low transaction volumes and as such the data is assessed as medium confidence.
It appears that the high level of growth that we’ve seen is not going to last with the rate falling back to near-on flat levels in the coming 24 months. Again this is assessed as medium confidence based on low transaction volumes.
Merricks North 3926 +11.74%
Merricks North is another higher-priced suburb on the Mornington Peninsula where, the median house price has risen by 11.74% to $2.61 million with medium confidence, based on 1 sale.
This is a suburb that is some distance from the city and is appealing to those with money to spend – particularly, those seeking a tree or sea change.
In terms of the growth cycle, Merricks North is also at the peak of its cycle and will likely slow down in the coming 12 months according to HtAG forecasts, with a medium level of confidence.
To see suburbs with strong growth potential with high confidence, subscribe to one of our plans.
Melbourne’s Next Growth Suburbs
Despite the overall Melbourne market appearing to be flat, there are still a number of areas that are set to see strong growth.
Overwhelming we are seeing a trend here where there is a flight to quality, with a number of suburbs with median house prices above the $1 million range, expected to see strong growth. While some of these suburbs are away from the CBD, there are still options for those looking to buy closer to the city.
Flinders 3929 +19.54% Forecast Growth
Flinders in the Mornington Peninsula Shire looks like it is getting set for a strong 24 months, with growth of 19.54% predicted with medium confidence according to HtAG forecasts.
This is another one of those suburbs with high median values, that is some distance from the inner-city. However, it also experiences low transaction volumes.
Flinders has been a strong suburb for a long time and as we can see price growth is consistent and it’s predicted median values will increase to $2.78 million over the next two years.
Flinders is a rising market as assessed by HtAG and could see near double-digit growth in both 2021 and 2022 and has seldom had a period of negative growth in the last decade.
Flemington 3031 +16.16% Forecast Growth
Flemington has been relatively flat in terms of price growth since the end of 2017, but that looks set to change with HtAG forecasting growth of 16.16% over the next two years.
That should see the median value increase to $1.27 million and is assessed as medium confidence by HtAG.
Flemington is assessed as being a rising market with medium confidence and as we can see, has not seen negative growth in the last 12 years.
Box Hill 3128 +11.58% Forecast Growth
Box Hill is another suburb that is around 15km from the CBD while still be assessable and popular.
For that reason, Box Hill also has a long period of consistent growth and that trend looks like it is set to continue going forward.
HtAG is predicting the median house price to increase by 11.58% to $1.98 million with medium confidence over the next 24 months.
HtAG has assessed the Box Hill market as rising with medium confidence, which suggests it is a good option for both investors and homebuyers in the current market.
As we’ve seen, the Melbourne market has shown resilience over the past 6-12 months and largely been able to overcome the COVID enforced lockdowns.
We are already starting to see a trend towards suburbs that are away from the CBD, but still within commuting distance. Similarly, there is still demand for high-quality properties above the median house price.
While transactions have been low this year, there are still suburbs that are set to grow over the next 12-24 months.
In fact, there’s one suburb that is expected to grow by 12.26% with high confidence.