Melbourne Property Market 2013: Steady Recovery Overall
By Kristie Kwok on 23 Dec 2013
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Real estate trends in Melbourne show high auction clearance, quick private sales and growth in building approvals.
The Melbourne housing market has recovered strongly from a poor 2012. House prices grew by 6.6 per cent and sales volumes have also gone up.
Apart from encouraging sales, real estate results in Melbourne have also delivered high auction clearance rates, despite there being nine Super Saturdays in the year where more than 1,000 properties were put up for auction.
Additionally, private sales have performed solidly with Melbourne houses reportedly selling at their quickest in more than eight years. Approvals were also up by 18 per cent suggesting increased building activities.
Real Estate Market in Melbourne Split With Some Suburbs Performing Better Than Others
Not all areas performed equally during the year. As highlighted in a recent Street News article, stronger performing suburbs such as Armadale and Elsternwick appear to have lower stock levels leading to stronger buyer interest, bidding and property prices.
Fringe suburbs such as Truganina, Doreen, Cranbourne and Pakenham on the other hand, struggle to cope with an oversupply of homes.
Key Economic Factors in 2013 Supported Growth of the Melbourne Property Market But There are Challenges Ahead
The low interest rate environment has undoubtedly lifted the Melbourne property market in 2013. The RBA continued to reduce borrowing rates to boost the building industry. Opinions remain divided as to whether rates will go up or down in 2014.
Unemployment rates have remained reasonable this year but they are rising. The closure of the Ford production plants in Broadmeadows and Geelong, as well as the recent announcement of Holden’s exit from Australia will likely compound consumer uncertainty going forwards.
Post-election optimism has kept business confidence in Victoria at high levels despite challenging trading conditions during the year.
The Australian stock market has performed solidly which aids the high end prestige property market; the All Ords has delivered an impressive 30 per cent return in the past 18 months.
Population growth is expected to continue its upward trend, with recent reports predicting that Melbourne will overtake Sydney to become the nation’s largest city in 40 years. Housing demand will no doubt grow accordingly.
SMSFs and Chinese Buyers Heavily Featured in 2013 Property News in Australia
These two types of buyers have been held responsible for the high demand for property in Australia.
As deposit rates continue to drop, many have sought to buy real estate through SMSFs in the last twelve months hoping for better returns.
Chinese demand for property in Australia on the other hand, has been fuelled by Chinese restrictions on property purchases and tax disincentives.
2014 Outlook: A Tougher Year for Property
Despite an encouraging 2013, many property analysts predict a much tougher year ahead with the anticipated weakening of our economy, rising unemployment and consequently less positive consumer sentiment.
Readers of our Melbourne property market updates would have no doubt read about the signs that have started to emerge of a slower market.
The jury is out as to the direction of 2014. However, Peter Sarmas, the director of Street News, believes that a stronger US economy and a weaker Australian dollar will boost confidence and stabilise property values in 2014.
