Hello and welcome to another Nyko Property market update. Lots to go through this month with record low interest rates
and the biggest increase in property prices seen since 2010.
Melbourne led the country in the June quarter for growth in
property prices with a quarter on quarter increase of 5%. Sydney
and Perth also performed well with 2.7% and 3.2% rises respectively. Housing prices were up 2.8% nationally over
the quarter, the third consecutive rise and a level of growth not seen since
March 2010.
The market still has some challenges in Melbourne though,
with an oversupply of new homes in the outskirts of Melbourne and a rash of new
apartments in the city center, which are likely to work against sharp price
rises in those markets. The
opportunities lay in the middle ring suburbs (5-20km from the CBD) priced close
to the Melbourne median price of $553,447.
With the rest of the economy seemingly slowing, the Melbourne
property market shows strong indicators that it is set for further growth in
the coming 12 months. One of the main contributing
factors is Melbourne population growth, leading the country again by adding over 77,242 people
in 2011-12 reaching a population in mid-2012 of 4.25 million. It was the 11th year in a row the
Bureau of Statistics estimates that Melbourne led the nation’s growth. BIS Shrapnel senior economist Jason Anderson
said "This will mean that Melbourne,
with its long-term population growth of 1.3 per cent a year, will displace
Sydney as Australia's largest city by 2037."
Many commentators sense that confidence will come back even stronger after the election with First Home Buyers, who
are currently staying out of the market (led by investors), able
to borrow money at 5% interest - a much bigger incentive than any
grant. 1 year fixed rates have been found as low as 3.99% at the time of writing.
Interest rates are the other big factor affecting the
property market, having fallen to a record low cash rate of 2.5% and the big banks followed with their cuts uncharacteristically quickly. Just 3 minutes after the Reserve Bank
announcement NAB reduced its interest rates by the full 0.25% while Westpac followed
shortly thereafter with a reduction of 0.28%. The reserve bank has now reduced the cash rate by 2.25% since
November 2011, making affordability the best it’s been in many years.
Dealing with investors day in and day out, our office has a
good feel of what is happening in the Melbourne property market. What we have seen since August/September last
year is a steady rise in confidence and inquiry by investors, who are traditionally
the first to re-enter the market after a reduction. This now seems to be filtering through to the
rest of the market with clearance rates in Melbourne over 70% consistently this
year, peaking at 82% last Saturday.
If you would like to be regularly updated on the property market and other important issues affecting the Melbourne property market click the follow by email button to the right.
Bill Nikolouzakis – Nyko Property
