By Jamie Salter
Pakenham is becoming more appealing – especially for first home buyers – on the back of declining house prices in Melbourne.
The annual pace of house and unit price growth is easing across Melbourne and surrounding suburbs, according to Domain’s June Quarterly House Price Report.
In Melbourne’s June quarter, house prices slipped by 0.9 per cent to $1.07 million, which is the first back-to-back quarterly decline since the 2018-19 downturn.
Ray White Pakenham’s Gavin Staindl said growth had declined marginally in Pakenham.
“This rate of increase couldn’t have lasted and it had to come back. I think it’s a good thing it has slowed down,” Mr Staindl said.
“Relatively speaking, we’re in a very affordable area in Pakenham.
“You can travel into Berwick or closer to the city and you’re paying twice as much but here in Pakenham, you can get four-bedroom houses under 10 years of age for around $600,000 to $650,000, so for a lot of first home buyers it’s quite appealing.”
Although Australia’s combined capitals saw house prices fall for the first time in two years, Pakenham will see more consistent prices.
“Our ups and downs aren’t as high. We will see a further dip but I don’t think it will be that drastic,” Mr Staindl said.
With interest rates continuing to increase, first home buyers won’t be able to borrow as much as they would have previously, making Pakenham an appealing area for first home buyers.
Domain chief of research and economics Dr Nicola Powell said the report showed affordability constraints and reduced borrowing capacity would steer buyer demand to affordable options, such as entry-priced houses.
“The changing market dynamics across our capitals are also being driven by a rebalancing of supply and demand, weighing on overall buyer sentiment,” Dr Powell said.
“Some Australian households, and prospective buyers, are much more sensitive to higher interest rates and strong inflation levels due to the high level of debt being carried, ultimately eroding savings.
“We are seeing some Australians being placed in a financially vulnerable position, particularly in areas with a higher purchase price.
“However, there are a number of reasons that suggest households could be resilient to these cash rate hikes, as asset balance sheets are in a good position due to strong growth in dwelling prices, strong household savings and some mortgage holders being ahead on their repayments.”
New listings in Melbourne have started to track lower, indicating home owners are not rushing to sell as housing conditions cool and interest rates rise.