Melbourne’s commercial property market is set to regain momentum in the second half of 2019, despite negative noise surrounding the dwindling number of transactions, according to one commercial property agency.

Savills Australia has predicted a stabilisation of market conditions in the next six months, with Savills Director of VIC CBD & Metropolitan Sales, Nick Peden, saying consumer confidence was expected to “build enormously” following Saturday’s federal election result.

“With the share market at 12-year highs on the first day after the Coalition's election victory, the threat of a cap on premium increases as promised by Labor was removed,” he said.

“There is no doubt that the Melbourne property market has softened since mid-2018, predominantly due to the tightening of bank lending, easing consumer confidence levels, and the softening of the housing market.

“But with strong fundamentals underpinning the market, we can expect a stabilisation of prices in the short term, and with greater confidence, improvement will soon follow.”

Mr Peden said Victoria’s nation-leading population growth, strong employment conditions, and “more than likely” future interest-rate cuts would all contribute to the comeback.

“We anticipate that as 2019 progresses, consumer confidence will build and, coupled with a relaxation of lending criteria from banks, we will see housing prices rebound, which will in turn positively impact the commercial market,” he said.

“The obvious requirement for housing will increase with the population growth of Melbourne.”

Mr Peden referenced the Housing Industry Australia’s Hotspots report, which states that Melbourne boasts 12 of Australia’s top 20 building growth areas.

“This suggests that Melbourne is still very much in demand and will continue to be for many years to come, as the booming population growth continues,” he said.

He went on to say that Melbourne’s office market was the “star performer,” leading the nation with the lowest vacancy rates nationally, and most vacancy rates at 10-year lows.

“Released earlier this month, Savills latest global Impacts report revealed that the Melbourne CBD office market is leading the charge in yield compression worldwide,” he said.