Just over 1,400 Melbourne homes will go to auction this week, up 40% on last week’s number.

It will be the city’s busiest auction week since the week ending 10 December.

Last week, Melbourne’s auction clearance rate was two-thirds of the homes put to bidders, still considerably lower than Sydney’s clearance rate of 74%.

Green shoot in home values?

The activity coincides with Melbourne recording positive growth in CoreLogic’s rolling daily home value index for the first time since 17 November.

The index measures daily price movements in Australia’s capital city housing markets.

On Thursday, Melbourne’s day-on-day change led the capital cities with 0.27% growth, well ahead of the next capital Adelaide at 0.12%.

Although daily movement is not sufficient to indicate a trend, it ends a three month decline in the city’s home values.

Melbourne's oversupply issue

Melbourne’s housing market has been an anomaly among Australia’s major capital cities in recent months with home prices falling 0.9% in the three months to January.

CoreLogic currently has the quarter-on-quarter change climbing marginally at 0.8% lower.

CoreLogic’s head of residential research Eliza Owen said the Melbourne market was experiencing a classic case of oversupply.

The research company’s data shows there were 81,203 home sales in Melbourne over the 2023 calendar year while the number of new listings was considerably higher at more than 90,000 homes.

In a Savings Tip Jar podcast late last year, Domain’s chief of research Dr Nicola Powell also noted Melbourne’s better supply of housing stock.

“If I was going to pick out any city where supply levels are much better, that is Melbourne, I think partly because of the ability for Melbourne to sprawl," Dr Powell said.

What’s ahead for the Melbourne market in 2024?

Consensus opinion is that the city’s strong population growth will help push Melbourne property prices higher in 2024.

Melbourne historically accommodates around 30% of Australia’s migrant intake which hit record levels in 2023 and will remain elevated in 2024.

All the big four banks are forecasting price rises in the Melbourne property market this calendar year.

ANZ expects between a 3-4% increase in Melbourne prices in 2024 with NAB forecasting the highest growth at 5.5%.

The banks are slightly more optimistic than property industry researchers with PropTrack forecasting a more modest 1-4% property price increase in Melbourne.

However, SQM Research forecasts Melbourne housing prices may drop further.

Its base case scenario sees movement between -0.3% to +1% for 2024.

It says this likely won’t affect the top end of the market which it expects will see record price rises while units will also outperform.

Image by Nina Kitaeva on Unsplash

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