The price of avocado on toast at a local Melbourne café does not seem too pricey in comparison to current and predicted Melbourne housing prices. Domain figures have shown that there has been a 16% increase in housing prices and a 6% increase in unit prices.
Trends show that the Melbourne property market has increased by 10.9% over the last year. However, despite this increase, buyer demand has not decreased, with Domain reporting a 16% increase in buyer demand.
2021 saw the Australian Prudential Regulation Authority advising banks to reduce the maximum amount that buyer can borrow, emphasising a need for banks to confirm that their potential borrowers are in a good financial position to repay their home loans if the interest rate were to rise to 3%. Despite this change, ABS figures continue to show a record high increase in new loan commitments, with investor loans coming out strong over owner-occupier loans.
It is not all bad news, major banks are forecasting a reduction in dwelling prices next year, with Westpac predicting a 7% decrease in 2023, followed by a 5% decrease in 2024. Commonwealth Bank have also predicted an 8% orderly correction in 2023. However, when compared to recent housing prices, this decrease will be moderate at best and houses will continue to be expensive compared to the average income of Australians.
