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Melbourne Property Market Forecast for 2024

CEO Khai Intela
Are you curious about what lies ahead for the Melbourne property market in 2024? After facing numerous challenges in recent years, it's natural to wonder what the future holds. However, despite the obstacles, there are...

Are you curious about what lies ahead for the Melbourne property market in 2024? After facing numerous challenges in recent years, it's natural to wonder what the future holds. However, despite the obstacles, there are several reasons to be optimistic about the prospects for Melbourne's real estate market in the coming year.

Melbourne's Property Market Turnaround

The Melbourne housing market has experienced its fair share of difficulties, from the economic impact of the COVID-19 pandemic to multiple interest rate rises and tightening lending restrictions. However, it's worth noting that the market started to turn a corner in early 2023. While the recovery hasn't been as rapid as in some other cities, Melbourne's property values have been steadily increasing.

According to various sources, including Corelogic's daily home value index, Proptrack, and Dr. Andrew Wilson's My Housing Market, Melbourne property prices have been on the rise. Although different research agencies may provide slightly different statistics, the overall trend is clear: Melbourne has passed the bottom of the downturn, and property prices are expected to continue their upward trajectory in 2024.

Melbourne Property Price Upturn Image: Melbourne Property Price Upturn

The Window of Opportunity

While the overall Melbourne property market is showing signs of recovery, it's important to note that different sub-markets within the city may perform differently. This creates a unique window of opportunity for homebuyers and investors to enter the Melbourne property market as it picks up momentum. By carefully analyzing the various sub-markets, buyers can identify areas that are likely to outperform others in the coming year.

Moreover, the potential for an interest rate cut later in the year could amplify the rebound in Melbourne property prices, making it an enticing market for property investors looking for significant capital gains.

The Slow and Steady Growth Trajectory

Unlike Sydney's quick recovery, Melbourne has experienced slower but more steady price growth. However, it's important to note that despite overall slower growth, more than 50 Victorian suburbs saw house price gains exceeding the national average in 2023. This growth can be attributed to increased migration, particularly from China and India, which has fueled demand for Melbourne properties.

Looking ahead, strong immigration and a lack of supply are expected to continue pushing Melbourne property prices upward. The city's population is projected to increase significantly in the coming years, with forecasts predicting an additional one million residents over the next decade. This population growth, combined with restrained price growth in recent years, sets the stage for potential capital gains in the medium to long term.

Rental Market Dynamics

While the Melbourne property market has shown resilience in terms of house prices, the rental market has experienced weaker conditions. The higher supply of rental properties and reduced demand have put downward pressure on rental rates. However, it's worth noting that Melbourne is currently experiencing a rental crisis, with historically low vacancy rates. This has resulted in a surge in Melbourne apartment rents by 23.1% in the past year.

Melbourne Rents January 2024 Image: Melbourne Rents January 2024

Investing in Melbourne's Real Estate: 6 Reasons to Consider

  1. Melbourne's demographics: With over 70% of Victorians living in Melbourne, the city's urban nature and growing population of 4.9 million people make it an attractive investment destination.

  2. Major infrastructure projects: Melbourne is set to benefit from significant infrastructure investments, including the North East Link road project, the Melbourne Metro Tunnel, the Westgate Tunnel, and the Melbourne Airport Rail Link. These projects will enhance transportation and improve connectivity throughout the city.

  3. Strong immigration and population growth: Melbourne's population is expected to increase by approximately one million people over the next decade, driven primarily by international migration. This growth will fuel demand for housing and contribute to long-term capital growth.

  4. School zones and property prices: Education plays a crucial role in property investment decisions, and recent data shows that school catchment zones can significantly influence property price growth. Investing in suburbs with well-rated schools can lead to higher property value appreciation.

  5. Historical price performance: Over the past 40 years, Melbourne's property market has been consistently strong, with median house prices increasing by 7.9% per annum. The market has demonstrated resilience and long-term growth, making it an attractive option for investors.

  6. Potential for future capital gains: Considering Australia's projected population growth and Melbourne's position as a global city, the long-term capital growth of the Melbourne property market is almost assured. Investing now, before the market takes off, presents an opportunity for buyers to secure properties at relatively lower prices.

Melbourne population growth Image: Melbourne population growth

In conclusion, while the Melbourne property market has faced challenges in recent years, there are strong indications that it has turned a corner and is on the path to recovery. With population growth, major infrastructure projects, and a resilient history, investing in Melbourne's real estate market in 2024 presents an opportunity for long-term gains. By carefully analyzing sub-markets and considering factors such as school zones, investors can capitalize on the potential of this thriving city.