The Victorian property market has experienced low levels of overall house and unit transactions over the last 12 months. As at December 2019 there were approximately 108,148 transactions compared to 131,622 during the same period in 2017.
This low level of supply has further segmented the Melbourne market i.e. properties that are situated in quality locations possessing scarce and unique features have experienced the greatest demand and therefore the highest price increases.
Properties that don’t have these sought after characteristics have continued to struggle.
Although there has been a recovery in the Melbourne market particularly over the last 6 months the recent high auction clearance rates are partly due to an increase in private treaty as a method of sale. During downturns selling agents eventually come to the realisation that there is no point in having an auction if buyers don’t show up.
Also, not all properties that were passed in at auction are reported therefore resulting in clearance rate figures being higher than is the true situation.
The December quarter Melbourne median house price was approximately $859,500. This represents an annual decrease of 1.2 per cent and a quarterly increase of 3 per cent.
Over the last 12 months auction clearance rates in Victoria have improved from around the 55 per cent mark to around 70 per cent.
Rental vacancy rates have remained steady. The proportion of vacant properties in metro Melbourne is around 2.2 per cent and 1.6 per cent in regional Victoria.
Over the last 12 months we have seen a steady decline in the cash rate. However the rate remained at 0.75 per cent following the Reserve banks meeting in December of 2019.
The Australian economy grew 0.4 per cent in seasonally adjusted chain volume terms in the September quarter 2019 and 1.7 per cent through the year , according to figures released by ABS.
The outlook for the labour market remains steady. Australia’s unemployment rate continues to hover at around 5 per cent.The annual inflation rate inched higher to 1.7 per cent in the September quarter of 2019 from 1.6 per cent in the previous period and in line with market expectations.
It is difficult to see the Melbourne market not continuing its upward trend. Regularly judged to be one of the world’s most live-able cities, in recent times Melbourne has added 327 people every day. This equates to around 120,000 per year and 460,000 in the past three years, ABS data shows. It’s also pegged to overtake Sydney to be Australia’s largest city within the next six years.
There is a significant variance in capital growth between two different properties so making the optimum property selection will determine the level of success an investor experiences.