What’s the Melbourne property market doing at Christmas?
Over December’s first 3 weekends, in excess of 4,333 auctions were reported to the Real Estate Institute of Victoria (REIV). More than 2,120 sales were recorded. Approximately 1,170 properties were passed in, 566 of those were on a vendor bid. The clearance rate averaged 68%, down on November’s 71%, and way down on December 2016’s 78%.
2017 was a showcase year of a housing market that reached it’s peak. Then settled a little. Melbourne has had a long and quite amazing growth cycle, with values rising every quarter for the last five years. All good things may come to an end, but as Maximus’s friend says in the movie Gladiator, “not yet friends, not yet”.
House values grew this year in excess of 10%. The current median Melbourne house price is up to around $880,000. But the trend over the year for clearance rates was a slow ramp downwards, starting around 80% in January and ending the year at 68%.
Sydney values dropped across 2017. The cooling in Sydney was largely caused by Scott Morrison’s tighter lending conditions, which were applied mainly to control the runaway Sydney (‘bubble’) market.
Fears the Reserve Bank would introduce interest rate rises some time in 2017 didn’t happen, and according to some economic experts, may not happen until late 2019.
A forecast released by QBE in 2017’s last quarter (QBE’s Australian Housing Outlook 2017-2020) predicts more Melbourne house value growth, but slower, estimating 10.2% over the next 2 years (rising to a median of $940,000 by 2020). QBE’s outlook for units however is not so rosy, forecasting a 4.8% decline in value over that period.
So looking forward, Melbourne’s exciting years of high growth are winding down. At the worst, we may be still heading for a soft landing. But this doesn’t mean there will be fresh snow under the sleigh when Santa lands. The forecast for Christmas day is a warm 22 degrees. Not too hot at all for cooking the Christmas roast!
We wish all our clients, readers, and the Real Estate fraternity the very best for a safe and joyous Christmas and holiday season. See you in 2018!
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