Melbourne is the first and only city in the country to record property price increases for the quarter, since the market downturn started in 2017. Melbourne apartment values grew by 2 per cent, while houses recorded a more modest gain of 0.3 per cent over the three months to June, according to Domain Group's latest house price report.
The median unit price in Melbourne is now $501,000, 2 per cent below the 2018 market peak, while the median house price is now $818,200, 10 per cent below the peak reached in late 2017. Unit and house prices in Melbourne remain 20 per cent and 49 per cent higher than they were in 2013.
"Melbourne's population growth has been a bit stronger so it's likely that has soaked up some of the supply of new buildings coming to market," Domain economist Trent Wiltshire said.
Other indicators also point to a turnaround in the Melbourne market. More buyers are attending open for inspections, sentiment has improved and auction clearance rates are at the highest point since November 2017.
While Sydney house prices fell by 0.4 per cent over the June quarter, it was the smallest fall since December 2017, a clear sign the Sydney market was nearing the bottom too, Mr Wiltshire said.
"This data covers April to June and we know what has happened in the market since late May, early June, with the election, interest rate cut and the APRA decision (to loosen its mortgage serviceability test)," he added.
"But even though this data is a bit stronger than expected, I don't think we'll see a big turnaround in prices – low single-digit growth in Sydney and Melbourne seems most likely, even with one to two more expected interest rate cuts towards the end of the year or early next year."
At the beginning of this month, CoreLogic's home value index recorded the first monthly growth in prices across both Sydney and Melbourne – 0.1 per cent and 0.2 per cent respectively – for the first time since the market peaked in 2017.
While Sydney's median house price had threatened to fall below $1 million earlier in 2019 given the sharp trajectory of price falls over the past two years, it's looking unlikely with the median price now at $1,032,338.
Sydney house prices are now back to early 2016 levels and units are back to mid-2015 levels, but affordability remains a big concern in that market.
The biggest downturn in Melbourne property prices since the 1980s looks to be at an end, with apartment and house prices rising in the June quarter.
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