Your House Is Probably Worth Less Than It Was This Time Last Year
2018 was a tough year for Melbourne house prices.
City-wide, median prices were down close to -10% compared to 2017. Not great news for existing homeowners.
I’m not going to get into all the reasons behind the falls (we get paid a decent quid for detailing that information to businesses across Melbourne and Sydney, and our clients wouldn’t appreciate us sharing all this for free).
But, I thought I’d share a quick couple graphs that provide some context behind these price decreases…
The Grey Bar in the graph below shows how much Median $ House Prices grew by from 2012-2017, and the Red Bar shows how much Median $ House Prices changed from 2017 to 2018.
On average, the price gains from 2012-2017 were 15x greater than the price decreases from 2012-2017.
In other words, for every 1% decrease from 2017-2018, there was about a 15% increase in the 5 years before.
These are Council Area figures, and it’s important to note that suburbs within each area vary significantly. If you live in Ivanhoe for instance, don’t look at the Banyule bars and say ‘Hey, my house price went up by 58%, then fell by only 2%’ because it didn’t, and it didn’t.
No, this graph simply shows that the recent price decreases are minuscule compared to how much prices increased in the previous 5 years.
Below is another graph that explains this, focusing on 3 different suburbs within Banyule.
Labels on the far right show the Median $ House Price for each suburb at the end of 2018 (accounting for all sales in the previous 12 months). The next labels show prices at the end of 2017. And, labels on the far left show prices at the end of 2012.
The Median $ House Price in Ivanhoe at the end of 2018 was $1.340m. That’s down about -15% compared to 2017 ($1.580m), but up about 47% compared to 2012 ($0.910m). Ivanhoe owners wouldn’t be happy about 2018 trends, but the knowledge that their house is likely worth close to 50% more than it was 6 years ago isn’t such a bad thing, eh?!
Rosanna prices fell by about -3% last year, but are up 71% over 6 years. It’s a similar story in Heidelberg West: down -4%, but up 75%.
Nobody likes to see their biggest asset go down in value (me included!). My hope is that a bit of historical context puts minds at ease.