Property values in Victoria virtually flat-lined in the three months to July 2007, with Melbourne values dropping half a percent and regional properties lifting just 0.75%. However with yields continuing to increase, the market seems just right for picking.
Real Estate Institute of Victoria (REIV) CEO Enzo Raimondo says that the Reserve Bank’s August decision to lift interest rates by 0.25% will do nothing to boost the current flat market.
“REIV research shows that when there has been a rate increase, it appears to slow down property price growth in Melbourne’s mortgage belt, the outer suburbs, and dampens activity,” Raimondo says.
The inner and middle suburbs of Melbourne are currently regarded as unaffordable, says Steve Copeland, Victoria President of the Urban Development Institute of Australia (UDIA). Copeland adds that this level of poor affordability is a drastic change from 2001, when only the inner suburbs were regarded as having some affordability pressures.
“Victoria is better off at present in relation to the other states, but there has still been a significant deterioration in overall affordability in Victoria between 2001 and 2006,” Copeland says. “Our advantage is only comparative.”
A national undersupply of 20,000 homes could easily blow out to 120,000 in Copeland’s view. He believes this shortage demands a national response involving all levels of government.
“With development lead-in times as they are and the threat of rising interest rates hanging over our heads, we simply can’t afford to delay any further,” he said.