MARKET OVERVIEW
Market Overview October to November 2014
The Reserve Bank has left the cash rate unchanged at 2.5 per cent
in November 2014. This marks the 15th consecutive month of steady
interest rates as the Bank again reiterated that this stability is likely
to continue. The general consensus is that there will be no movement
in interest rates until the second half of next year, which should see
this break a record for the longest period of stable interest rates. The
current record is 19 months from 1994 to 1996.
The auction market remained solid in October with nearly 4,600
auctions held in the month, which is a new record for the month of
October. There was also a record auction weekend with 1,680 auctions
held in the week ending 26th October. However, the clearance rate
averaged slightly lower than this time last year at 71 per cent although
this is still a solid result given the high volumes.
While the number of auctions remains high, the number of transactions
is lower than this time last year. There were an estimated 9,900 sales
transacted in October 2014, which is about 8.7 per cent lower than a
year ago as the private sale market reported fewer sales. Nevertheless,
there was a large increase in listings this month with most of this
increase from private sale listings.
House prices continued to grow this month with a 1.6 per cent increase
in the REIV House Price Index (HPI) to 168.8, which is the fastest rate of
growth since June. Despite the slightly faster rate of growth this month,
the overall trend still points to slower price growth.
After a large decline in the previous month, the REIV Property Market
Sentiment Index (PMSI) remained stable at 110 in October 2014. REIV
members were most optimistic about the number of transactions and
the number of new listings but were more pessimistic about turnover in
the next three months, particularly as the market winds down over the
Christmas-New Year period.
The vacancy rate in Melbourne remained stable at 3.1 per cent in
October 2014 but there was a notable increase in the inner (0-4km)
region as more supply comes on to the market. However, in contrast to
the metropolitan market, the vacancy rate in regional Victoria continues
to decline to 2.3 per cent, the lowest level since February 2012.
Supportive information source: REIV Monthly Research Bulletin – published November 2014
