Melbourne home prices tipped to rise, building costs to run ahead of inflation in Melbourne

A National Australia Bank report led by chief economist Alan Oster is predicting home values will continue to surge this year, despite outbreaks of coronavirus plunging major cities back into lockdown.

In Melbourne the forecast is for 17.6 per cent growth by the end of 2021 followed by an additional 3.5 per cent rise, adding almost $150,000 to the median property value by the end of 2022.

Building costs across all major Australian markets are growing faster than inflation – a trend that looks set to continue for years due to construction demand outstripping supply for both labour and materials. These are among the findings of the 12th International Construction Market Survey from Turner & Townsend, which reveals that government money and low interest rates are fuelling a global construction boom, the report predicts the Melbourne market will experience annual construction cost hikes of 2.5 per cent up to the end of 2023.