Melbourne’s property market has experienced its first price decline in two years.
The value of a typical house slipped 0.25 per cent to $902,000 in May, PropTrack’s latest Home Price Index shows.
That equates to about $2260 in the first fall the Melbourne house median has had since April 2020.
PropTrack economist and report author Paul Ryan said the last time prices fell was at the start of the pandemic, when the house median declined 0.78 per cent.
“Despite this fall, we’re not seeing a generalised downturn,” Mr Ryan said.
“We’re seeing balanced market conditions rather than a downfall.”
He said the slip was likely due to some uncertainty among buyers surrounding rising interest rates.
“People are expecting interest rates to be as high as 2.5 per cent by the end of the year,” Mr Ryan said.
“Once we get more certainty, buyers might be a bit less reticent on the auction podium.”
Melbourne’s median unit price was down 0.44 per cent in May to $605,000, while the overall property figure slipped 0.27 per cent to $785,000.
It comes after the Reserve Bank of Australia (RBA) announced a 0.25 per cent rise to the official cash rate last month to 0.35 per cent, in the first increase since November 2010.
Jellis Craig Brunswick director Greg Cusack noted the number of buyers attending open for inspections had significantly decreased.
“Attendees have dropped by about 25-30 per cent, which has resulted in previous auctions having two or three active bidders being now brought back to one or two,” Mr Cusack said.
“Properties are still selling well, but both vendors and buyers have the right to negotiate, versus in a stronger market like in late 2021, where multiple bidders would compete to reach vendors’ expectations.”
A typical house in the rest of the state fell 0.36 per cent last month to $569,000.
Regional units were Victoria’s only dwelling type to increase in median price, rising 0.27 per cent to $393,000.
Mr Ryan said this was likely due to regional units being priced under $400,000, which appealed to both first-home buyers and investors.
The Victorian area with the highest percentage increase since May 2021 was Shepparton, where a typical dwelling now costs $409,000 after rising 21.56 per cent.
Warrnambool and the South West also performed well, where dwelling prices increased 21.52 per cent over the past 12 months to reach $490,000.
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