Melbourne Inner North Market Updates

Melbourne Inner North / West - Summer 2024 Market Review

Home Melbourne Inner North & West – Summer 2024 Update

Mar 08, 2024

Melbourne’s real estate microcosm revealed discerning buyer behaviour this quarter. Escalating living costs, mortgage payments, and diminished borrowing power prompted a re-evaluation of buyer priorities. Which is no surprise, considering the nuances within the market over the past 3 years. In 2022, national home values declined 4.9% in a course correction following the extraordinary 24.5% surge of 2021. Despite interest rates tripling in the past 18 months, the 8.1% increase in national home values through 2023 appeared relatively resilient.

In the four weeks ending 17 December, the average final clearance rate was 58.9%. This was down from 62.5% at the end of November, though still higher than the 55.1% average recorded in the same period of 2022. The pace of capital growth also dropped, experiencing a gradual easement from June, and most notably through November.

Rate hikes through November notably impacted the market, with monthly and quarterly indices of -0.3% and -0.2% respectively. Both buyers and sellers tightly followed what will likely continue to be an unpredictable and volatile element, as (according to CoreLogic) more than 70% of real estate professionals expect interest rates to have the most significant influence on the housing market in 2024.

At the close of the quarter, Sydney values remained -2.1% below their January 2022 peak, while Melbourne values were -4.1% below their March 2022 peak. With the RBA forecasting a rise in unemployment, an indicator they closely monitor to track inflation, there is soft expectation of the market growing in the foreseeable future.

As is usual within the Inner West market, if a property offered scarcity and was priced well, the likelihood of a successful sale was high. If the agent quoted too high (expecting 2021 results) the property lingered on the market. Buyers needed to be cautious of sales quotes, as some were blindsided by exceeded quote ranges, selling $200k-$300k above top of the quote range. The below sales demonstrated the importance of being able to value a property proving critical in successful acquisition.

Region Roundup

Moonee Valley Balanced Market
Merri-Bek Balanced Market

The Moonee Valley LGA certainly showed steady results towards the end of 2023. The spring market was in full flight, with quality homes hitting the market, finally providing welcomed options for buyers after a long period of low stock. Quality renovated family homes performed well, especially ones in A grade locations. Those initially looking to renovate increasingly weighed up the current labour and material costs and opted to purchase turnkey instead.

Results in Essendon and Moonee Ponds especially proved that the West is becoming more and more desirable and slowly creeping toward the easter suburbs median prices.

Setting the benchmark in Mooney Valley were 73 Roberts Street in Essendon with the sales price of $4.025m, and 130 Park Street in Moonee Ponds that went for $4.875m. Both were large family homes on 800+ sqm of land.

This quarter Merri-bek buyers leaned toward homes that provided immediate accommodation without any further improvement, though they were not desperate to secure a home at any cost. The economic conditions finally caught up with buyers who could not and would not meet vendor asking prices. Therefore, properties sold well if priced fairly with room for negotiation, quality homes attracting multiple bidders in pursuit of the keys.

Starting with a property that failed to sell, 57 Glenmorgan Street in Brunswick East was passed into a large crowd with no bids. It has not as yet relaunched at a lower asking range. In 2022, 7 Slatters Street in Coburg sold for just over $1.2m, a recent renovation extension saw a steep increase in value, selling in November for $2.6m.

Proving that unique properties always sell well and are a good investment based on scarcity, a 3 bedroom church conversion at 4/103A Blyth Street in Brunswick sold for $1,600,000, $200k above the quote range.

While the most notable sale of the quarter, 8 Hamer Street in Brunswick East sold for $3.95m. A great result, considering the quote range was up to $3m. With 2 bidders determined to buy, any other interested parties were quickly knocked out with their aggressive bidding.

Looking Ahead

As it currently stands, buyers are not keen to commit themselves to higher costs in order to secure a property. With the increase in cost of living and mortgagee repayments, the urgency of moving has certainly tapered off. Buyers will only move for the right home at the right price. This tentative stance will likely deepen with the considerable potential for a decline in interest rates mid-2024, begging the question; Could home values surpass the projected 3% increase? This speculation gains complexity when factoring in Melbourne’s comparatively softer growth rates over the last 12 months, adding an intriguing layer to the evolving market dynamics.

Rentals look set to become a sector of interest in the coming year, as James Pilliner from Nelson Alexander said, “We have seen many Rental Providers put their properties to market in early 2024, combatting the lack of rental property available and producing a generous amount of new listings for buyers to secure. The increased stock should be very beneficial to the sales market as we can finally offer good choice to buyers, and it should give the market some buoyancy for at least the first half of 2024”.

Looking further ahead, the property demand landscape is pivoting towards units, anticipating higher growth in this dwelling category in the coming years. Buyers do not want to move further out to be able to buy a home, instead their criteria will move towards a unit or town house to ensure they are still living in a desired location.

For 2024, the sentiment within the Inner North real estate market is on a marked incline. Elevated buyer confidence has been observed as this year kicked off with good numbers at inspections. Jesse Dolcetta from Barry Plant Real Estate summed up by saying, “The pivotal factor of positivity stems from the decline in inflation, coupled with the likelihood of sustained interest rate holds and the anticipation of potential rate reductions later in the year. This collective sentiment leads me to believe that the real estate market in 2024 is gearing up to be a positive one”.

Inner North / West Area Specialists

Nuno Raimundo

Get in touch with Nuno & Kelly to find out more about the Inner North/West market, or make an appointment to discuss your requirements and see how we can help you get into your ideal home sooner.