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
Category: General Posted by: Mark
HPI Growth
The REIV House Price Index (HPI) for Melbourne increased by 1.6 per cent to 168.8 in October 2014. This is the fastest rate of growth since June but falls short of the 2.2 per cent growth recorded in October 2013.
Clearance Rate
The average clearance rate in October 2014 was 71 per cent, which is lower than last year’s 72 per cent. This is still a solid result for the auction market given the high number of auctions held in the month.
Auctions Held
There were more than 4,600 auctions held in Victoria in October 2014, which is a new record for the month of October although it falls short of the alltime record of 4,764 auctions held in March 2014 (which had an extra weekend). There was also a record-breaking weekend with 1,680 auctions held in the week ending 26th October.
Days on Market
The median number of days on market for Melbourne has decreased by one day to 38 days (revised) in October 2014. The decline was driven by decreases in the inner and middle suburbs. The median number of days in the outer suburbs remained unchanged at 38 days.
Vacancy Rate
The vacancy rate in Melbourne remained stable at 3.1 per cent in October 2014. 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.
Market Sentiment
After a large fall in the previous month, the REIV Property Market Sentiment Index (PMSI) remained stable at 110 in October 2014 after a large decrease in the previous month. 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.