Melbourne house values are tipped to fall more than any other Australian capital in 2019 but it’s the city’s elite suburbs that will bear the brunt of the correction.
The January Home Value Index Forecasts by Moody’s Analytics Australia and CoreLogic has estimated an about $45,000 (6 per cent) fall for the city’s $751,000 median value house in 2019 — the worst to be seen in an Australian capital this year.
It adds to the 6.5 per cent correction recorded since the city’s housing market peaked in December 2017.
But the worst of the coming losses will centre on affluent neighbourhoods, with forecasts of an 11.2 per cent correction still to come in the city’s inner east, and 10.2 per cent in the inner south.
Moody’s Analytics economist Katrina Ell said the more substantive falls predicted in the inner east and inner south reflected their more substantive rise in values from 2013-2017.
The worst reduction expected anywhere else in the city was a comparatively mild 4.6 per cent for the south east, less than $35,000 for a median value home.
A modest increase is expected in 2020 meaning Melbourne-wide the correction is tipped to total 15.1 per cent, barely correcting the 14.4 per cent house values rose in 2017.
While the forecast shows another tough year ahead for Melbourne, it puts an end in sight.
“The key takeaway would be that Melbourne is in for another tough year for the 2019 housing market,” Ms Ell said.
“We are expecting to see a trough in home values later this year and that’s why we are starting to see a pick up by 2020.
“The broader state economy is in a good position. And because there’s been a bit of a drop off in supply that will put a floor on the falls heading into 2020.”
The report shows house prices are expected to continue rising in Victoria’s regional centres across this year and into 2020, with Geelong likely to be the best performer with a 7.2 per cent median house value increase on the cards this year.
Moody’s Analytics reports are used to help shape the thinking of economic risk assessors around the globe.
The firm argued that the market correction was a “soft landing” and would mark Australia as one of the handful of developed nations to dodge a more severe correction.
This was largely thanks to the Australian Prudential Regulation Authority pulling strings behind the scenes to moderate home lending behaviour, despite a good economy overall.
MELBOURNE HOUSE VALUE FORECASTS 2019
Inner East: -11.2%
Inner South: -10.2%
North East: -4%
North West: -4.2%
Outer East: -4.2%
South East: -4.6%
Mornington Peninsula: -4.5%
*Source: CoreLogic, Moody’s Analytics