Inner Melbourne's inner east to lead property recovery efforts: Moody's Analytics

Greater Melbourne house values have started showing signs of a recovery in the third quarter but remain 12.5% below their peak, according to the latest data from Moody's Analytics.

They found, this follows a decline in prices for 18 months prior to the reversal which began in June.

The fall in house values has been most pronounced in Melbourne’s inner suburbs, particularly Inner South, where house values have fallen by as much as 19% from their peak.

However, the steady decline in house values in the Greater Melbourne area, which decelerated further by mid-2018, has gradually settled through the second quarter and started to reverse by the third quarter as values have picked up, rising by 1.3% in August.

The decline in unit values across Greater Melbourne in recent months has been less pronounced than the decline in detached houses.

Moodys noted that there is a notable pickup over the third quarter, as the month-over-month change in unit values rose to 1.5% in August. 

Katrina Ell, Economist at Moody’s Analytics said: "The recovery in house values in the Greater Melbourne area is broad-based but led by a notable pickup in Inner East, where month-over-month growth in house values was 2.6% in August. In comparison, there are signs of a more delayed recovery in the North East and Outer East, and a weaker month-over-month pickup in West, North West and Mornington Peninsula suburbs.

"In contrast, house values across regional parts of Victoria have experienced more persistent weakness as home values continued to fall through August in most regions, with particular weakness in Bendigo, Warrnambool, South West, Shepparton and Hume.

"Elsewhere in regional Victoria, there are initial signs of a recovery in home values, namely, in Geelong and Latrobe-Gippsland.

"While unit values have risen in Ballarat, Hume and Latrobe in August, unit values have continued to decline in other suburbs such as Shepparton, Warrnambool and South West. Meanwhile, unit values in Bendigo have risen notably since March."