Melbourne's most expensive houses record largest value growth: RP Data's weekend auction preview

Melbourne's most expensive houses record largest value growth: RP Data's weekend auction preview
Robert LaroccaDecember 7, 2020

The August RP Data CoreLogic Home Value Indices results released this month show a rise in dwelling values of 0.8% in Melbourne and a 7.6% rise this year.

A detailed review of the market shows that the most expensive segment of the market, (25% most expensive houses), recorded the highest value growth this year.

This segment of the market will be interesting to follow this spring and over summer as there is a strong correlation with the performance of the auction market.

In the first eight months values rose by 9.6% compared to 8.7% for the middle of the market, and 3.7% for the most affordable segment.

All segments of the market for houses have outperformed the unit market with the exception of the most affordable segment. Values of the most affordable 25% of the unit market have grown by 4.4% this year compared to 3.7% for houses.

A longer term view of the market, comparing its performances since the last peak in values, reveals a slightly different picture. Values for houses in the most expensive and middle segments of the market peaked in October 2010. Since that time it is the middle of this market that has seen the strongest increase in values of 9.8% compared to 7% for the most expensive segment.

Given most of the people selling will have bought their homes before 2010, it is this longer-term view that is more relevant.

There are 927 auctions scheduled this week in Melbourne compared to 975 for the same time last year. The highest number of auctions is expected in the Prahran where 19 are scheduled.

As the market enters spring there are fewer homes on the market than a year ago with 28,988 active listings in Melbourne and 54,619 in Victoria. 12 months ago the comparable number was 32,454 in Melbourne and 58,664 in Victoria. This is a positive sign as it highlights a more active market with more buyers.

The extent that this translates into higher prices will depend in many ways on the volume of new listings. Thankfully for buyers the number of homes being newly listed for sale is rising compared to last year.

Time on market results for houses sold at private sale fell from 47 days to 45 days over the last week whilst vendor discounting rose from -5.3% to -5.6%.

Key data

  • Clearance rate week ending 7 September: 73.5%
  • Melbourne auctions expected week ending 14 September: 927
  • Melbourne private sales time on market week ending 7 September: 45 days (houses)
  • Melbourne vendor discounting market week ending 7 September: -5.6% (houses)
  • Listings being prepared for market are -1.1% lower in month ending 7 September (seasonally adjusted)

Robert Larocca

Robert Larocca is Victorian housing market specialist for CoreLogic RP Data.

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