The Melbourne property market has continued on its merry way in 2015, but there have been signs over the past few months that the upward price acceleration is starting to slow.
This is a welcome trend as any further upward movement would be unsustainable.
The housing market experienced a strong June 2015 quarter, with the median price setting another record at $706,000 – up 5.2 per cent on the March 2015 quarter.
The average clearance rate for Victoria was 77 per cent in July, compared with 72 per cent for the same time last year.
The demand for vacant rental space in Melbourne was stable at 2.9 per cent in July, while rent for houses remained flat at $400 a week. The vacancy rate in regional Victoria also stabilised at 2.4 per cent over the month.
The cash rate was unchanged at its record low of 2 per cent following the Reserve Bank of Australia meeting in August.
According to the RBA, economic growth is expected to improve steadily to more than 3 per cent by 2017.
The unemployment rate in Victoria for July rose to 6.2 per cent from 6.1 per cent the previous month.
The national inflation rate was at 1.5 per cent over the June 2015 quarter.
There has been nothing overly scientific about residential property price cycles in Melbourne. I say this having observed the market for more than 30 years.
House prices rise
slowly most of the time then spike sharply for one to two years. However, a point lost on many commentators is the substantial variance in price movement between different types of property.
Generally speaking, residential properties close to sought-after amenities with scarce and unique features will increase in price at a substantially faster rate than other properties. Conversely, in a downturn these properties hold their value while others decrease in price.
The current upward price cycle has lasted longer than average. Moving forward, we will see more moderate upward price movements.
Source of statistics: Real Estate Institute of Victoria
