After a booming 2007, Victoria’s capital sees an easing in demand while first home buyers are left looking for shelter. Residex data indicates Melbourne’s median property valued has now reached $481,500 after prices rose an impressive 20.03% in 2007. While median house value rose by 2.62% in March, the quarter year results was just 0.31% growth - a sign buyers are becoming less desperate.
“The affordability problems have seen the demand that has powered Melbourne’s residential market abate slightly and we expect this trend to continue through to the end of 2008 and into 2009,” says Braxton Chase executive director Andrew Donnelly.
In this sort of climate, Donnelly says purchasers must look for strong, baseline criteria when choosing property.
“Metropolitan areas that we expect to outperform in the year ahead will be driven by more cogent fundamentals such as improved accessibility, job creation, urban revitalisation and relative affordability,” he explains.
However Donnelly has identified a potential oversupply concern for some of the major developing residential areas in the inner city.
“While much of the action in the past year has been focused on Melbourne’s inner city suburbs, there is a strong chance that looming oversupply in this region – especially in the Docklands/Southbank areas – will slow price growth,” says Donnelly.
This is not of as much concern to the Real Estate Institute of Victoria (REIV) who feel that there is still plenty of upside as Melbourne’s CBD residential unit market continues to mature.
“I think the inner suburban market was probably oversupplied 4 or 5 years ago when all these apartments first came onto the market but it certainly has been absorbent,” says REIV president Neil Laws.
“The rate of growth there has been stronger than the rate of growth in established homes,” he adds.
The REIV consider the most public gauge of market performance is auction clearance rates which have dropped from a peak of about 80% last year to just over 65% in recent months. The institute believes that while actual sale numbers continue to be good, it is a sign of interest rate rises starting to bite.