Melbourne house growth slows due to new policy initiatives

REIV acting president Richard Simpson said that the moderation was attributable to 44 per cent of all sales in the September quarter being below $600,000.

“In the June quarter, we saw vendors with houses around that $600,000 price point hold off selling in order to capitalise on greater competition from first home buyers,” Mr Simpson said.

“These incentives have certainly worked with first home buyers, accounting for 18.3 per cent of all new home loans in August, the highest since September 2013.

“Despite the moderation, the market remains strong, with the Melbourne median house price up [by] a remarkable 14 per cent on the same period last year. We’re also seeing buyer demand continue to outstrip supply and a high level of vendor confidence.”

Outer Melbourne dominated the top 20 growth suburbs this quarter as buyers looked for affordable entry points to the market.

The seaside suburb of Dromana was the city’s best performing, with its median house price increasing by 15 per cent on June figures to $790,250. Sunbury, Ringwood East and Diamond Creek also experienced double-digit quarterly growth. 

“Given the strength of the market at present, buyers are looking for new growth areas which offer value without the need to compromise on amenities or infrastructure,” Mr Simpson said.

“Increased competition for homes further from the city is boosting the median house price in many of these areas, with all of the city’s most affordable suburbs experiencing significant annual growth.”

He also said that the city’s inner ring recorded the strongest growth of any region in the September quarter, with its median house price increasing by 1.5 per cent to just over $1.5 million.

“Buyer demand within 10km of the CBD remains strong, which is being supported by a shortage of quality stock.”

Apartment prices were also impacted by the government’s first home buyer initiatives, with the city-wide median falling for the first time in six quarters, down by 2.5 per cent to $587,000.

Meanwhile, house prices in regional Victoria increased for the third consecutive quarter, up by 1.2 per cent to $385,000.