Melbourne Property Market Review
The Melbourne property market can be categorised into two sectors, established housing and developments.
The established housing market is performing well with strong demand, increased auction attendance and strengthening prices.
The development market remains inconsistent with significant supply of off-the-plan apartments in the CBD and inner ring of Melbourne and an increasing supply of land in the growth corridors of the West, North and South East. Although population growth indicates the need for more housing, supply levels may impact on capital growth.
The Melbourne market has awoken from its soft period of 2011 and 2012. It kicked off the year with a positive start and continues to perform well with clearance rates remaining steady at above 70 per cent.
According to the REIV, the median house price has risen 2.8 per cent to $562,000 in 2013’s June quarter, compared to the June 2012 quarter where the median house price increased 8.4 per cent to $518,500.
Some of the key performing areas during the last quarter include Hawthorn East, Doncaster East, Glen Iris, Kew, Ringwood and Thornbury.
There is currently increased demand across most sectors of the market which has led to competition and increased prices. Earlier in the year we witnessed a rush of first home buyers in the market leading up to the reduction in the first home owners grant for existing properties. This may temporarily cause inflated prices as increased demand leads to strong competition. Often when government grants come to an end prices revert back to regular levels.
Currently interest rates are at record lows and rents are stable. This has led to greater investor confidence and more activity in the market, particularly in the inner east and south-east suburbs. Clearance rates and competition in these locations are high and as a result prices have been very strong during the last quarter.
The upcoming winter period will see the traditional reduction in stock on the market as buyers prefer to wait for the spring selling period. With that said, winter offers an opportunity for vendors to capitalise on a reduction in competition and perhaps achieve a higher price than they would during the warmer more active months.
Greville Pabst, CEO