What Median $ House Price Growth Means

According to Corelogic, the median $ house price across Melbourne increased by nearly 14% over the last 12 months. So, in a city of over 400 suburbs, you’d have to spend about $800,000 to buy a conventional family house today, whereas this time last year, you would have had to spend about $700,000 for the same house.

Think about that for a second. Very few people could possibly save an additional $100,000 in just 12 months, so it’s safe to assume that today’s middle-of-the-road purchasers are predominately either existing homebuyers looking to purchase their 2nd or 3rd home, migrants from interstate or overseas, or investors seeking to build / add to their portfolio.

A deeper look into price increases beyond medians uncovers some pretty interesting market realities. If you were looking to enter the market a few years ago you’d need to spend up to buy one of the cheaper houses available (see below graph). Fast forward to this last Financial Year, and you would have to spend to buy a similar quality of house – an extra for an entry level house.

Perhaps you needed to upsize, and you were looking for one of the larger, more expensive houses in . A few years back, you would have budgeted , but today expect to pay an extra for the same type of house. That’s a big increase.

Notice how much buyer budgets have had to change over the last 3 years? Whereas could have bought you one of the better houses available a few years ago (top 25% most expensive), today, it would get you an entry level house (bottom 25% least expensive). It’s a similar story across Melbourne’s north, as buyers are having to dramatically change their expectations around size, quality, and location: a 4bed 2bath has turned into a 3bed 1bath; a turnkey, recently renovated gem has turned into an original condition fixer-upper; and, walking distance to trains and shops has turned into a short drive.

Median $ price increases aren’t just statistics. They indicate fundamental changes in market conditions that impact all property types, across all price ranges. Whether you’re a buyer, a vendor, or simply an interested observer, it’s important to study changes in ranges so as to better understand your current and future options.