As predicted in previous issues the Melbourne property market has experienced a correction of between 0 and 10 per cent over the past twelve months. The beginning of the slowdown can be traced back to the second week in November of 2003 where there was a noticeable reduction in activity levels.
We believe that this correction has now stabilized. There has been a noticeable increase in activity since the recent federal election in October of last year. Towards the end of 2003 the market was in danger of becoming overheated and hence this downturn avoided another boom\bust cycle.
“The December quarter Melbourne median house price rebounded 5.2% to $382,500, up from a revised fi gure of $363,000 in the September quarter. This represents a fall in the median price of 1.3% over the past 12 months. The result can primarily be explained by a surge in market confi dence following the federal election result, subsiding fears about imminent interest rate rises and a large jump in fi rst home buyer activity.
With clearance rates at around 60 per cent and evidence of renewed confi dence by sellers as listings start to pick up, the market is showing a return to normal levels of activity.
As for the future we believe there will be moderate growth over the next twelve months. We believe the Melbourne property market will experience capital growth of between 0 and 10 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 infl ation are relatively low and consumer confi dence is high. This should ensure quality properties enjoy reasonable capital gains over the short to medium term.*