Property market update: Melbourne, April 2022

By Zarah Mae Torrazo 18 May 2022 | 1 minute read

Melbourne’s growth plateaued over April and posted its first quarterly decline since the start of the pandemic boom, further dimming the Victorian capital’s prospects of returning to its 2021 form.


While the start of the year gave market watchers a glimmer of hope that Melbourne will recapture its glory days in 2021, the city’s performance in April has real estate investors bracing for a bumpy year. 

In another sobering milestone for Sydney and Melbourne, CoreLogic’s latest data showed that the two biggest cities have hit their first quarter of negative territory since the extended lockdowns of 2020.

And while Melbourne is faring better than Sydney in terms of monthly trends, the Victorian capital is not exactly primed for growth either. 

Market indicators show that the city is seeing slowing growth due to rising listings and weakening demand. Local agents are also reporting lower clearance rates and sales activity, further signs that Melbourne has left the last stop of the property boom. 

According to CoreLogic’s director of research Tim Lawless, Sydney and Melbourne are the cities leading the decline in property values across the country. 

But he also highlighted that it’s not just the two biggest cities seeing a slowing trend in property price growth. 

“Every capital city and broad ‘rest of state’ region is now recording a slowing trend in value growth, albeit with significant diversity,” he stated. 

He said that there were several factors weighing on capital market property prices throughout April, the most prominent of which was an impending hike in interest rates.

With the [Reserve Bank of Australia] cash rate set to rise, potentially as early as tomorrow, we are likely to see a further loss of momentum in housing conditions over the remainder of the year and into 2023, he said. 

As of writing, the RBA moved to raise the country’s official cash rate by 25 basis points from 0.1 to 0.35 of a percentage point on 3 May — the central bank’s first move to its benchmark interest rate in over 11 years. 

The long-awaited decision has brought a ripple effect to the market, with most market analysts ruling that the rate hike is the final nail in Sydney and Melbourne’s property boom coffin. 

Commenting on the potential impact of the RBA’s decision on the two cities, the managing director of SQM Research Louis Christopher warned that the initial reaction after Australia’s first interest rate rise in over a decade would be to immediately “spook” buyers, and he expects a sharp drop in the number looking to snap up a property.

Mr Christopher added: “This will put further downward pressure on house prices, which [have] already started to weaken.”

Westpac’s senior economist Matthew Hassan echoed this observation, reiterating his previous assessment that the property boom is on its way out. 

“Overall, the April update confirms the view that the market passed a turning point at the start of the year with turnover now moving lower quickly and price growth tapering off in most markets,” the economist said. 

He also sees the declines speeding up as the year progresses. “This shift is expected to accelerate in coming months as the RBA delivers a series of interest rate rises with a broad correction phase expected to begin mid-year,” he said.

Critically, the four biggest lenders in the country have already announced their intention to take respective steps to adjust to the rate hike — which is seen to further slow down in the coming months as buyers grapple with higher home loan payments. 

RateCity research director Sally Tindall warned Australians with a mortgage that they should brace for the coming months.

“As expected, the big four banks have moved in unison and passed on the RBA hike in full to their millions of variable home loan customers,” she said.

“Australians with a home loan should now brace for more pain, as this is only the beginning of a series of hikes ahead.

So, what will the coming months look like for Melbourne’s property market? For now, let’s see how the city performed in April 2022. 

Property values 

CoreLogic data showed Melbourne’s property market saw no movement in dwelling values over the month of April. 

And while it is a far cry from the turbo-charged growth the city recorded throughout the boom, the figures are a slight improvement from the 0.1 per cent decline in March.

However, in a clear sign of the city’s slowing growth, Melbourne saw its rolling quarterly growth fall by 0.1 per cent  marking the first time since 2020 that the indicator entered the negative territory. 

Compared to April 2021, the Victorian capital’s median values are now up by 8.4 per cent — a steep decline from the 14.7 per cent seen in March. 

Previously, Mr Lawless had warned that declines in the two biggest cities were likely to accelerate in the coming months as the strong gains recorded in early 2021 fall out of the 12-month calculation.

Despite the tapering in growth, Melbourne defended its title as the second-most expensive city to buy a property in the country.

The average cost of a dwelling in the city stood at $806,144 at the end of April, a price increase of less than $1,000 per month. 

The further weakening of Melbourne’s average dwelling value was prevented by the unit market’s strong performance during the period, as the sector saw a solid 0.4 per cent increase over the month. The figures are also an improvement from the 0.2 per cent increase in March. 

Over the year, the median value of a unit in the city has risen by 4.7 per cent to currently stand at  $630,671 — representing an almost $1,600 price growth over the month. 

Meanwhile, the house sector failed to regain its footing, declining by another 0.2 per cent during the month and further sliding from the 0.2 per cent fall it recorded in March. 

Despite its weak performance,  the average price of a house in the city entered the seven-figure mark once again at the end of April to stand at $1,000,926, indicating a $1,900 month-on-month increase. 

Compared to the same period last year, the median price of houses in Melbourne has risen by 10.1 per cent. 

Confirming the slowing growth in the city, Domain’s latest data also showed Melbourne house prices fell 0.7 per cent to an average of $1.09 million in the March quarter.

Meanwhile, unit prices fell 2.2 per cent to a median of $578,775 during the same period, the sector’s steepest decline in values since 2017.

Domain chief of research and economics Dr Nicola Powell said the city’s market is losing momentum after hitting a peak at the end of 2021.

“We’re seeing homes listed for sale quicker than they’re being purchased,” she said. “Overall supply of homes for sale in Melbourne is about 8 per cent higher than the five-year average. 

“There are more sellers in the market than there are buyers … Buyers have choice, they have power to negotiate. Buyers realise they have time to contemplate decisions,” she stated. 

Supply and demand

Supply and demand are still calling the shots on capital cities’ performance, as the rise or fall in each city is closely linked to the level of available properties on the market. 

In Melbourne, SQM Research’s latest data showed total residential listings climbed by 3.4 per cent over the month from 35,900 in March to 37,135 in April. 

Compared to the same period last year, the number of available stock in the city is down by 9.3 per cent. 

New listings (or properties that have been on the market less than 30 days) fell 5.5 per cent from 18,145 in March to 17,174 in April. On an annual basis, new listings in the Victorian capital are down by 14.2 per cent. 

Meanwhile, data showed that old listings or property listings over 180 days are also up 3.5 per cent from 5,802 in March to 6,005 in April. Compared to April 2021, old housing stock in the city has declined by 16.3 per cent. 

Mr Christopher said that the drop in new stock in Sydney and Melbourne should not come as a surprise, as April tends to be a slower month for listings. 

But he noted that there are other factors affecting sellers’ sentiment. “There may also have been an element of caution by would-be new vendors given the slowdown in the market,” Mr Christopher noted

The expert also commented on the broad-based rise in old listings, stating: “This is a clear indication that absorption rates across the country are slowing and more and more existing vendors [are] not achieving the price they seek.” 

Separate data from CoreLogic showed that the total advertised listings in Melbourne is 5.5 per cent higher than levels seen a year ago — indicating that supply in the city has normalised. 

The higher level of stock across the city can also be explained by an above-average flow of new listings coming on the market in combination with a drop in buyer demand, according to CoreLogic. 

Mr Lawless explained that with the gap between supply and demand in the city closing, the negotiating power is shifting towards buyers. 

With higher inventory levels and less competition, buyers are gradually moving back into the driver’s seat. That means more time to deliberate on their purchase decisions and negotiate on price. 

“Demand has been falling in these markets as shown by the slower absorption rate, which has allowed supply levels to bounce back to long-term average levels in Sydney and above-average levels in Melbourne,” Mr Lawless stated. 

The weakening buyer demand has triggered a steep drop in home sales during the latest quarter, with transactions in Melbourne down by 14 per cent in the last three months. 

Auction market 

Melbourne’s clearance rate remained below the 70 per cent mark in April, as the high number of properties up for grabs cooled competition in the auction scene, according to Domain. 

Domain’s latest auction report showed that the Victorian capital’s clearance rates rose from 64.6 per cent in March to 66.6 per cent in April. Despite the monthly boost, the figures are 3.4 percentage points lower compared to the rate recorded in April 2021. 

Clearance rates continue to outperform units in April for the second consecutive month. According to Domain, the gap between the two sectors has narrowed this month to 4 percentage points, with houses recording clearance rates of 68.1 per cent and 60.5 per cent, respectively. 

And despite the month containing two consecutive long weekends, namely the Anzac and Easter weekend, auction volumes remain strong, with the city hosting 4,893 auctions throughout April. 

Commenting on the recent trend in volumes, Domain noted listings remain high in the first four months of 2022 as sellers strategically time the market by listing and selling their properties while prices are at or close to a peak or before any potential increases in interest rates.

Domain also noted that a potential rate hike (which has already occurred) will negatively impact demand.

The average price of a house up for auction in Melbourne remained higher on an annual basis by 16.5 per cent to $1.17 million but declined 4 per cent over the month as price momentum tapered off. 

For units, the average auction price for apartments declined over the month by 2.2 per cent to $1.10 million but is up annually by 10.3 per cent.

Meanwhile, CoreLogic reported that over April, a total of 4,181 properties went under the hammer in the city, with a final average clearance rate of 64 per cent.

If you want to be in the loop about what’s happening across auction markets in the country, follow our weekly updates in our News section.  

Vacancy rates 

Tenants are doing it tough in Melbourne’s rental market as vacancy rates continue to decline and weekly rental rates continue to rise across the city. 

According to Domain’s latest data, tenants are facing tough competition for a rental space in Melbourne as the city’s vacancy rate stood at 1.7 per cent in April, its lowest rate since the start of the pandemic. 

The figures are down from the 1.8 per cent vacancy rate seen in the previous month and now only 0.6 percentage points off the record low seen in 2018.

The areas with the highest vacancy rates were Stonnington – East (3.3 per cent), Banyule (2.8 per cent), Boroondara (2.7 per cent), Whitehorse – West (2.6 per cent), and Stonnington – West (2.6 per cent). 

Meanwhile, the areas with the lowest vacancy rates were Sunbury (0.3 per cent), Yarra Ranges (0.3 per cent), Cardinia (0.4 per cent), Casey – South (0.6 per cent), and Knox (0.6 per cent). 

The number of available rental listings in the city also fell by 2.4 per cent to just above 9,000 over the month. 

Rental market 

With Melbourne declared as a newly pledged member of the landlord’s market club, Dr Powell warned tenants to brace for further increases in weekly rents in the city — which she noted are already at record-high levels. 

“Many cities are sitting at record high asking rents, with all capital cities seeing an increase in median rents for the first quarter of 2022, except Sydney houses, which remain steady at a record high,” the expert said. “The current conditions bolster the likelihood of future rent increases.”

Domain’s latest rental market report showed that Melbourne’s house and unit rents both jumped by $15 per week over the year to March, with median rents for houses now $450 per week and units $390.

Meanwhile, CoreLogic reported that rents for units are now starting to catch up with houses. 

“On a rolling quarterly basis, we are now seeing unit rents rising faster than house rents, especially in Sydney and Melbourne where rental conditions across the unit sector were previously much softer,” Mr Lawless commented.

He explained that the shift in rental demand towards units reflects both rental affordability pressures, which are deflecting more demand towards the cheaper unit sector. He also noted that the return of overseas migrants and visitors is also causing demand to skew towards inner-city and higher-density precincts. 

Melbourne’s unit rents were up 3.6 per cent higher over the past three months compared with a 1.2 per cent rise in house rents. On an annual basis, house and unit rents in the city are now up by 5.1 per cent and 8.4 per cent, respectively.

Outlook for Melbourne’s property market 

With the long-awaited rate hike now factored in, what will the next few months look like for Melbourne?

Citing historical data, CoreLogic noted that there is a clear correlation between rising rates and cooling of property prices. 

“Although we are expecting the housing market to move into a downturn through the second half of the year, it is important to remember the context of the recent growth phase, Mr Lawless said.

The rate hike decision has also caused some economists and analysts to double down on their predictions that the decline in house prices will speed up, naming Sydney and Melbourne as the biggest losers in the wake of the RBA’s decision. 

AMP Capital chief economist Shane Oliver forecasts the two biggest cities will see the biggest immediate impact from the move, expecting a 15 per cent decline in prices by the end of 2023 or early 2024. 

The RBA also gave the same ballpark figures, predicting a drop of 15 per cent in house prices due to the cash rate hike. 

“After nationwide housing prices increased by 22 per cent over 2021 (the strongest annual growth rate since the late 1980s), the pace of housing price growth moderated in most markets in early 2022,” the review said.

“Future increases in interest rates could also weigh on housing and other asset prices,” the central bank further forecast. 

The Reserve Bank also cited the historical relationship between interest rate rises, as well supply and demand factors, and warned that a major decline in property prices could be on the horizon.

“A 200 basis point increase in interest rates from current levels would lower real housing prices by around 15 per cent over a two-year period,” the RBA said. 

Despite the gloomy forecasts, there are still market observers that are optimistic about Melbourne and Sydney’s prospects. 

While Mr Christopher believes rate rises continuing through the second half of this year and into next year would be a “pretty big negative” for the market, he is not predicting double-digit declines. 

But the expert still expects dwelling prices to decline by up to 7 per cent in Sydney and 8 per cent in Melbourne this year.

“There are some reasons to think there could be a softer landing for prices, followed by a speedy recovery in prices,” Mr Christopher said.

“The labour market is tight and if we see an acceleration in wages growth, so that it catches up with inflation, that would be positive for prices.”

Meanwhile, Dr Andrew Wilson, the chief economist at My Housing Market, expects property prices in the two major capital cities to decline a “couple of per cent” this year, after already cooling from their boom peak of the past two years.

“Melbourne and Sydney have consolidated those higher prices and there is no more capacity to grow at the spectacular rates of last year,” the expert commented. 

For more industry expert insights on the property market, check out our amazing podcasts. Also, make sure to check our News section for the latest property market reports, insights, news and useful tips and strategies for investors. 



Property refers to either a tangible or intangible item that an individual or business has legal rights or ownership of, such as houses, cars, stocks or bond certificates.

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Property market update: Melbourne, April 2022
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