Melbourne CBD, Southbank and Docklands labelled danger markets

Melbourne still has strong numbers for price growth, but its up-cycle is nearing the end.

Sales activity, while still solid, is falling steadily and the number of growth markets is close the lowest levels since the up-market started.

The other clue pointing to the end of the cycle is that all the precincts that still have multiple growth suburbs are at the lower end of the market - most are outer-ring suburban areas. It’s now difficult to find inner-ring or middle-ring precincts with growth suburbs.

To demonstrate the steady decline in sales, a comparison of numbers in successive March Quarters shows this pattern: 33,109 (2015); 28,899 (2016) and 28,948. Sales in the June Quarters have been 38,031 (2015), 34,115 (2016) and 32,300 (2017).

In Hotspotting’s research for The Price Predictor Index, the total number of suburbs with growing sales activity has dropped from 96 in the Autumn report, to 60 in Winter edition and further to just 35 in the Spring survey.

These trends confirm a steady diminution in the strength of the market. And in terms of annual price growth, the latest data from CoreLogic has Melbourne ranked third on dwelling price growth behind Hobart and Sydney.

The remaining growth locations are in the cheaper areas, such as the LGAs of Brimbank and Melton (west); Hume and Whittlesea (north); Wyndham (far south-west;) and Frankston and Mornington Peninsula (far south/south-east).

But even these affordable markets are gradually declining in terms of the number of growth suburbs.

The leading precincts are Whittlesea and Wyndham LGAs. Whittlesea is consistently one of the city’s strongest markets, driven by affordability, infrastructure and jobs nodes.

We have identified four suburbs with growing sales momentum, down from six in the Winter survey. The suburb of Epping is one of the remaining strong markets, with sales moving from 115 to 145 to 135 to 160 to 172 in recent quarters. 

In neighbouring Hume, growth suburbs include Broadmeadows, Roxburgh Park and Meadow Heights (where sales have lifted from 27 to 29 to 34 to 45 to 51 to 54 in the past six quarters).

Wyndham in the south-west is the other stand-out, led by Hoppers Crossing, Tarneit, Williams Landing and Werribee.

The Brimbank LGA has been one of the Melbourne’s most outstanding markets for the past 2-3 years. It still has three suburbs with rising sales momentum but a greater number of Plateau markets – further evidence of the wind-down in the market.

Cheaper markets in the far south/south-east, including the LGAs of Frankston, Casey and Mornington Peninsula, still have growth suburbs but, they are outnumbered by suburbs with Plateau-ing sales activity.

Upmarket and Middle Melbourne areas remain solid but most are dominated now by Plateau markets: they include the LGAs of Whitehorse, Moreland and Kingston. Very few growth suburbs remain.

There are also many suburbs where sales activity has dropped considerably, compared to 2014-2015 levels. They include Box Hill, Brighton, Brunswick East, Caulfield North, Chadstone, Clayton, Doncaster, Footscray, Glen Waverley, Hawthorn, Kew, Richmond, Rowville, South Yarra, West Melbourne and Windsor.

The worst performers are the inner-city unit precincts. We rank the CBD, Southbank and Docklands as Danger markets, as well as Carlton and Collingwood.

Terry Ryder is the founder of hotspotting.com.au. You can email him or follow him on Twitter.