Overall housing affordability has improved in Melbourne, bucking national trends, according to a new report released today by ANZ and CoreLogic.
The ANZ CoreLogic Housing Affordability Report shows that while housing affordability deteriorated nationally in June 2024, home values in Melbourne have moved backwards by 4.9 per cent, while incomes have risen modestly.
Melbourne is now the nation’s third-least expensive city by median dwelling value, decreasing by $40,000 since the 2022 peak.
The key findings of the report include:
- ³Ô¹ÏÍøÕ¾ly, the median dwelling value to income ratio has increased to 7.9 from 7.5 a year ago.
- The median income household across Australia continues to require a near-record high of 10.6 years to save a 20 per cent deposit.
- The portion of income required to service a new mortgage nationally has reached a series high of 50.3 per cent nationally (45.2 per cent in Melbourne), up from 49.4 per cent nationally in .
- The portion of income required to service median rents is up to 33.0 per cent nationally, up from 32.3 per cent in March. In Melbourne, there has also been a lift to 28.2 per cent, up from the 5-year pre-COVID average of 26.6 per cent.
- While Melbourne values are down, most other capital cities have seen strong increases, creating a shift in price rankings. The Melbourne median price was recently surpassed by Perth and Adelaide, making Melbourne the third-least expensive city by median dwelling value.
- Supply is key, with Melbourne demonstrating that residential construction will need to increase substantially if affordability in Melbourne is to be maintained.
CoreLogic’s Head of Research, Eliza Owen said: “The downturn in the Melbourne housing market is holding, with six consecutive months of decline through to August 2024. As a result, we’ve seen a significant shift in affordability, with dwelling values falling by 4.9 per cent from the peak.
“Coupled with modest income growth, Melbourne has become one of the few markets where housing affordability is improving. Some of the largest improvements in affordability over the past two years has been in some of the more expensive areas of the Melbourne market, such as Flinders on the Mornington Peninsula and the inner-south suburb of Beaumaris.
“The rental market however remains tight, with rental values growing at an average annual rate of 8.4 per cent over the past three years. This will see renters continue to struggle when coupled with ongoing low vacancy rates,” she said.
ANZ Economist, Madeline Dunk said: “Melbourne is currently gaining an affordability advantage on other capital cities, which presents a silver lining for buyers. However, to maintain affordability, measures to support ongoing residential construction will be vital.
“³Ô¹ÏÍøÕ¾ly, the median dwelling value to income ratio has increased, making it more challenging for households to save for a home deposit.
“Elevated interest costs, low pre-sales, competition with the infrastructure sector for trades, and higher building costs could impact future dwelling approvals, commencements, and completions. This could lead to further declines in housing affordability across the country,” she said.
The full report is available at .
