The price of a residential real estate around Melbourne, Victoria, has fallen steadily in the last year, although low auction clearance rates somehow indicate that prices are still too expensive for some buyers.
Average home prices declined by almost 5 per cent so far in 2018, but a forecast shows that prices in the capital city may even drop further by as much as 20 per cent in the next two years.
As of Oct. 31, the median price of a house in Melbourne reached $665,044. You could likely see a similar property in a place near the city with a lower price, but has a good chance of increasing in value. If you are not in a hurry to buy a home, then choosing to acquire a vacant lot could even let you save more money.
Aspiring homeowners, however, should prioritise lower-priced properties due to the current scenario on lending standards. The Australian Prudential Regulation Authority’s stricter rules for banks somehow affected the overall market in the country.
The APRA’s new regulations require banks to set their mortgage portfolio below 30 per cent, including interest-only loans. Borrowers with higher debt-to-income ratios will particularly have a more difficult time looking for financing options.
Other than Melbourne, the price drop has been noticeable in Sydney with a 7.4 per cent decline to around $834,000 in October year over year. These two cities make up the majority of housing investments in the country, so any price movement has a significant impact on the national housing market.
A real estate investment in the Melbourne CBD or nearby areas does not seem to be a good idea for now. You should consider nearby suburbs in the city, such as Donnybrook, where properties are more affordable and have a good chance of price appreciation in the future.