Melbourne chalks up a remarkable 19 consecutive quarters of house price growth
House prices in most capital cities are continuing to rise through the normally quiet winter months – and real estate analyst groups report that Melbourne has the most consistent growth performance of any Australian city.
Although there has been rampant media speculation about the potential for a housing bubble in Australia, current sales and demographic trends point to a very different outcome.
The consensus view from property analytic groups such as CoreLogic and the Domain Group is that house price growth will push higher through 2017 and 2018 but the growth rate will pull back.
This trend has critical implications for prospective buyers of residential real estate, especially those who believe they should “wait out” the market until there is some kind of big price fall.
In fact, with the analyst groups reporting year-on-year growth of 15 per cent in Melbourne, it’s more likely that buyers who procrastinate and delay transaction decisions will see prices move ahead of them, possibly at lightning speed.
According to the Domain Group, Melbourne’s median house price recorded a substantial increase over the 2017 June quarter, rising by 3.5 per cent to a new peak of $865,712.
Melbourne has now recorded a nation-beating 19 consecutive quarters of house price growth – a record for the state capitals which shows no sign of slowing down.
Domain Group data shows that Melbourne house prices have surged by 15.1 per cent over the year ending June for its best annual result since the 12 months to the September quarter of 2015.
Meanwhile, CoreLogic says its index of home prices for the combined capital cities rose 0.8 per cent in June, following a rare 1.1 per cent drop in May. Sydney and Melbourne drove the June increase, rising by 2.8 per cent and 2.2 per cent respectively, and the two largest Australian cities, now sought after destinations for international property buyers, can be expected to make further gains going into 2018.
On some weekends recently, clearance rates shot above 80 per cent.
He says buyers and sellers need to dispassionately assess what has been occurring in Melbourne’s market in the past 12 months.
“People have seen there has been a 15 per cent growth in house prices over the entire Melbourne market. They are also well aware that we are in a low interest rate environment and that the Reserve Bank is bullish on the economy.
“You can’t help but think as a buyer: ‘Will prices go up further if I do nothing? Maybe I should compromise on what I am thinking of buying. Is it likely to get harder?’”
Some bank economists believe house prices have been “temporarily restrained” in some capital cities in recent months, but this is light years away from the much talked about bubble burst.
To get a crash in prices, which would mean a 20 per cent and greater fall, there would need to be much higher interest rates or much higher unemployment. Neither of those things is in prospect.
Another key fundamental working in Melbourne’s favour is that Victoria is Australia’s fastest growing state, and most of the new international and interstate arrivals move to the capital.
The population in Greater Melbourne grew by 2.4 per cent last year, a very high rate, according to population experts.
If you’re looking to buy or sell Melbourne real estate, contact your local Nelson Alexander expert today.