Melbourne housing market remains solid in latest quarter; rate cut to underpin growth
The Reserve Bank today reduced the cash rate by 25 basis points to 2.25 per cent, the lowest level since the 1950’s. Interest rates had been on hold for the past 17 months which provided a solid platform for the property market across Melbourne and Victoria.
The national rate of inflation is currently at 1.7 per cent – well below the RBA inflation target of 2-3 per cent – which indicates an accommodative environment for continued low interest rates.
Melbourne’s housing market remained solid in the final quarter of last year, with the city’s median house price of $669,000 up five per cent on the September quarter. Prices increased in inner, middle and outer suburbs.
Supportive information source: REIV Monthly Research Bulletin – published February 2015
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Posted by: Mark
In 2014 this low interest rate level enabled the market to withstand the impact of moderating consumer confidence and to grow at a consistent rate.
The auction market experienced a strong last quarter in 2014, with two record auction weekends and approximately 41 per cent more auctions compared to the September Quarter 2014. There were over 13,400 auctions held over the quarter and around 3,500 auctions held during the month of December 2014. More than 40,000 auctions were held in 2014, well ahead of 2013 when 35,000 auctions were held.
The average clearance rate in December 2014 was 67 per cent, which is the same level as a year earlier. While the clearance rate fell slightly in the final two months of 2014, it is still a solid result given the high number of auctions in November and December.
Median house prices in Metro Melbourne grew 5.3 per cent over the December Quarter 2014, which was reflected in the overall increase of the HPI over the quarter. The REIV House Price Index (HPI) for Melbourne increased by 0.8 per cent to 170.1 from 168.8 in December 2014. Owing to the record auction weekends in October and November, the index increased significantly over the December Quarter. The REIV Unit Price Index (UPI) for Melbourne also rose by 0.4 per cent in January 2015 to 151.8. The HPI for Regional Victoria decreased 0.4 per cent in January 2015, for the first time in six months.
The REIV Property Market Sentiment Index (PMSI) fell by 2.7 per cent over January 2015, having increased sharply over the previous month.
This was a result of dampened sentiment for sales volumes and listings.
On the other hand, consumer sentiment in Victoria has improved slightly by 0.7 per cent during the month, however, it continues to track below expectations.
The vacancy rate in Melbourne tightened to 3.1 per cent over January 2015 from 3.2 per cent in the previous month. Vacancy rates in the inner suburbs decreased the most, falling to 3.1 per cent from 3.3 per cent in December 2014.
The REIV House Price Index (HPI) for Melbourne increased by 0.8 per cent to 170.1 in January 2014.
The index is currently 12.0 per cent higher than its value a year ago.
The average clearance rate in December 2014 was 67 per cent, which is at the same level as December 2013.
This is still a strong result for the auction market given the high number of auctions held in the month.
The auction market remained strong in December 2014 with over 3,500 auctions held, closing a big year for auctions in Melbourne.
Days on Market
The median number of days on market for private sales increased to 41 days in January 2014, after being stable at 39 days in December 2014.
The vacancy rate in Melbourne tightened to 3.1 per cent over January 2015 from 3.2 per cent in the previous month.
Over the same period, vacancy rates in Regional Victoria remained stable at 2.2 per cent.
The REIV Property Market Sentiment Index (PMSI) fell by 2.7 per cent over January 2015, having increased sharply over the previous month. This was mainly a result of lower expectations on new listings, which corrected after a sharp increase in December 2014.