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Market Snapshot July 2004

Over the previous few months the Melbourne property market has continued to soften. As usual, good quality properties continue to hold their price despite this downturn. Excellent buying opportunities are appearing as vendors are readjusting their price expectations.

The Melbourne median house price fell 0.8 per cent, down from $371,000 to $368,000 for the March quarter 2004. This latest result takes the annual increase to 6.1 per cent, the lowest annual growth since March 1996. However, Melbourne’s median house price has increased by an average of 2 per cent for the previous 11 quarters. The Melbourne apartment market recorded a fall of 2.1 per cent for the March quarter, down from $289,000 to $283,000 taking the annual increase to just 0.9 per cent. The inner-city apartment market has been largely affected by a significant number of new apartments coming on to the market during the last six months. *

What we have seen over the previous six months is typical of the property market cycle. Downturns will always be part of the cycle, fortunately they are only temporary. I believe the Melbourne property market will stabilise over the next twelve months with capital growth of between zero and ten per cent depending on the quality of the individual property. At the moment the fundamentals of the economy are sound, employment is strong, interest rates and inflation are relatively low. This should ensure quality properties enjoy reasonable capital gains over the short to medium term. The quality of the property that is purchased is more important than at what stage of the cycle it is purchased. Overall we are predicting modest growth over the next two years but be assured, after this period prices will again increase sharply.

* Source: Real Estate Institute of Victoria

 

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