Even the Spring carnival couldn’t slow the Melbourne property market. Although 100,000 people were at the races on Saturday and more will grace the lawns of Flemington tomorrow, we still saw 339 auctions clear at a rate exceeding 80% and there were over 700 private sales reported to the REIV last week.
There has been plenty of talk about the market fluctuations throughout 2008 and 2009. We have seen reported figures of dramatic changes to our median prices. First, in November last year clearance rates were down around 50% clearance rate and then throughout early 2009 we saw the clearance rates move through the 70% and by May had reached the 80% range and have stayed there ever since.
But what most people are not talking about was the number of private sales and the types of properties that were selling. If we look at the median price for Melbourne homes we can see that it has moved from $450k to $423k to $403k and back to $480k in the space of 12 months. Everyone needs to remember these are very broad based statistics.
If you have been living and breathing the property market in Melbourne, all of it, not just the top end, not just the South East suburbs or the 7km circle, but the whole market, it was easier to see what was happening, and it beared little or no resemblance to the statistical data.
When times were looking gloomy in mid 2008, when everyone thought we were running headlong into the worst recession of our lives, most people were trying to divest themselves of any ordinary or poor investments in order to build up their cash reserves. This meant that a lot of very average properties were put on the market and sold at “fire sale” prices. In a statistical model, when many of the lower value properties are put on the market and fewer higher value properties are, the median will move down sharply. This doesn’t really give a good indication of where the property market is.
Even during the depths of despair in 2008, some good property was still selling above the equivalent 2007 prices. And throughout 2009 we have seen median prices “surge” forward. This is the statistical anomaly we saw in 2008 in reverse. Property prices in Melbourne will continue their 30 year trends for the foreseeable future. The top third of suburbs have averaged a median growth in excess of 10% p.a. since 1980. This data is from the Valuer General.
Property prices in Melbourne will continue to rise, despite the winding back of the first home owners’ grants, despite interest rises and despite the global economic downturn. There simply is not enough supply to meet the demand.
If you are interested in purchasing a property in Melbourne please do not hesitate to call for a free no obligation meeting.
Ian James
