Has Melbourne bounced back?

The recent capital growth data suggests a very modest increase for Melbourne, but what is really happening on the ground?

The CoreLogic growth data for Melbourne in February 2024 shows a mere +0.1% gain, however the market feels quite different for those who are currently active in the market.

There are several reasons why this headline, generalised data figure is not reflective of what’s actually happening.

Data lag is the first reason. Confirmed sales information is not timely enough for this fast-moving market.

In the normal course of events, a buyer and seller agree on a price and sign a contract. Not all sales results are recorded and reported at the time of sale. Many aren’t captured until settlement, when the title reflects the new ownership and the state revenue office collects the stamp duty.

In most instances, a 30-day, 60-day, or even 90-day, settlement will follow. Some settlements span even longer than this.

This process means the time period between the agreed sale price and the transaction’s final registration can be three-to-six months.

By the time these sales results on the record, the market could have shifted up a gear.

The second reason is segmentation. One tenth of a percent is not a high figure by anyone’s measure, but this is generalised data. If we segment the market and focus on dwelling types, for example, or suburbs or local government areas, the data tells a different story.

Take Melbourne’s inner to middle-ring north, for example. Darebin has recorded a 9% growth figure for the last 12 months.

For those buyers tackling the task of purchasing in Northcote, Thornbury, Preston or Reservoir, there is little surprise that bidding is competitive, auction clearance rates are tight, and sales results are stronger than anticipated. Based on the average growth in this area, a 2BR house in Northcote has grown $110,000 in value over the past year.

This is not congruent with the generalised growth of our city at all.

Our year has started strongly, with increased listing volumes being soaked up by increased buyer numbers. Our auction rates are firm and borrower numbers are healthy.

I predict that our March and April data will demonstrate a turning market, albeit a late reflection of what we are already experiencing on the ground.