Melbourne Property Values Rise in June, But Forecasts Remain Cautious
By Peter Sarmas on 4 Jul 2013
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The rise in Melbourne property values in June was underpinned by low mortgage rates, according to RP-Data Rismark’s latest Hedonic Home Value Index.
The report revealed that Melbourne dwellings jumped 2.3 per cent for the month – the nation’s second highest growth, after Sydney at 2.7 per cent.
Additionally, Melbourne apartments recorded the highest gains by any capital city dwelling in June, with a robust rise of 4.8 per cent, while Melbourne houses values also climbed by 1.8 per cent.
While these results are an encouraging sign that the Melbourne market has turned a corner, the same report revealed that over the last quarter, Melbourne dwelling values dipped slightly by -0.4 per cent.
Furthermore, on the investor front, RP Data revealed Melbourne houses and units were the nation’s worst performing over June. Gross rental yields returned just 3.7 per cent and 4.4 per cent respectively.
With such a mixed bag of data coming out of Victoria’s capital, some analysts are remaining cautious about Melbourne’s future growth.
In their recent report titled, ‘Residential Property Prospects, 2013-2016’, property forecaster BIS Shrapnel predicted that Melbourne prices would increase by a sluggish 5 per cent over the next three years.
“After accounting for inflation, prices are actually forecast to fall by 4 per cent in real terms,” said Angie Zigomanis, Senior Manager of Residential Property at BIS Shrapnel.
In contrast, the Sydney market is expected to rocket ahead 19 per cent, Brisbane 17 per cent and Perth 15 per cent over the same period.
Mr Zigomanis said that in the coming years, further growth in Melbourne’s median house price is likely to be “muted” off the back of a weakness in the state economy and an oversupply of property.
“Record levels of new dwelling construction from 2009-10 and continued strong supply of apartments have meant that supply is exceeding underlying demand and should result in vacancy rates rising.”
“Nevertheless, with interest rates at their current low levels, and with the prospect for further easing in rates in 2013, there should be enough to edge prices up despite these negative factors,” added Mr Zigomanis.
