A five-month surge in Melbourne house prices has undone the damage to the property market wrought by the global financial crisis, pushing the median house price to $469,357 and the median unit price to $377,077 — both record highs.
So far this year, Melbourne prices have soared the fastest in the nation, jumping 6.1 per cent in five months to eclipse 5 per cent-plus gains in Sydney and Darwin. Only Perth prices continued to fall.
The May price figures are produced by RP Data. They are regarded as more representative than those produced by real estate agents, as they compare “like sales” and so are not distorted by changes in the composition of the properties sold.
The figures are used by the Reserve Bank and cover 98 per cent of Australian sales.
“Our results herald a national recovery,” said RP Data research chief Tim Lawless.
Mortgage provider Rismark, which part-funds the RP Data index, declared the “doomsayers defied”.
“The housing market has been the cornerstone of our economy’s stability in 2009,” said chief executive Christopher Joye. “The robust rise in values this year has given builders and developers the confidence to hire labour and buy materials to invest in new homes.
“It has also given existing owners the confidence that their largest investment has been a secure store of wealth while other asset classes have been decimated.”
Melbourne houses that were sold in May stayed on the market for an average of just 29 days, the shortest period in Australia. The most dramatic price rises have been away from the centre of Melbourne, in Hume in the west, eastern outer Melbourne and Frankston.
Prices in the inner city and on the Mornington Peninsula continued to fall.
“So far the recovery has been led by first-home buyers,” said Mr Lawless. “But we are expecting to see more investors as rental yields continue to climb.”
Separately, Reserve Bank borrowing figures showed housing and government borrowing to be the only bright spots in credit markets, with personal and business borrowing sliding further.
The Housing Industry Association reported a drop in house sales in May, with Victorian sales down 8.7 per cent — most likely because of uncertainty about the May budget.
The ANZ Bank said it put more weight on the house price figures, with economist Alex Joiner declaring as unlikely the “Armageddon scenario foreshadowed by some”.
“From here on, we expect prices to continue to show modest consolidating growth,” he said.
Tags: Hodges Real Estate, Melbourne Real Estate, real estate price growth, Reserve Bank, residential property prices
July 1, 2009 at 2:04 pm |
We have to see if this is a sustained recovery or a red herring one. It’s hard to see what’s driving the price upwards. Obviously it’s supply and demand but what is stimulating the demand?
July 1, 2009 at 2:07 pm |
If it’s first home buyers driving the demand ( and it is ) then I have concerns that it’s a long term upswing. When the Government cuts the purse strings there may be a long way to fall as something else will need to take up the slack
July 2, 2009 at 4:27 am |
Good to see Brian. Finally the reporters have been forced to actually report the facts! Peter.
July 2, 2009 at 10:59 pm |
There may be a number of reasons for the market surging the way it is:
- Interest rates at their lowest for many years
- Government initiatives
- Many people still in secure employment
- Lack of available real estate
- Population growth in Victoria
The facts are that the growth and the demand are not occurring in purely first home buyer price ranges, we are seeing an effect at all levels.
Will this demand continue – who knows, all we can discuss are the facts of what is happening in the market place at the moment.