The Melbourne property market has returned to a moderate growth phase in the past 12 months, with evidence of stronger demand for homes in suburbs with medians below $1 million.
Buyers looking for value this spring will find that there are a number of suburbs where the medians peaked a year ago and have since recorded a drop in price.
This is most evident in some of the city’s most expensive suburbs, for instance East Melbourne, Armadale, Mont Albert, Malvern, Brighton, Brighton East and Toorak.
In those suburbs the median house price has fallen by more than five per cent over the past year and, while they will regain the peak value again in the future, the next few months may present opportunities that were not available last year.
In contrast, the impact of population growth has seen ongoing levels of strong demand and price growth in a range of more affordable locations, for instance Tarneit, Croydon, Springvale, Mount Martha, Caroline Springs, Werribee and Reservoir.
Population growth affects the more affordable suburbs to a greater extent because it is where most people live.
The rate of population growth has reduced throughout 2010. At its peak, Melbourne was welcoming around 1800 new residents per week and that number has fallen to around 1300. This has occurred at the same time as the rate of dwelling construction has been increasing, so the gap between the number of homes the state needs and what is being supplied has narrowed. In time, this will help make housing more affordable.
The ongoing trend of stronger demand in the affordable segment of the market is also evident when comparing the sale outcomes of homes sold at auction with those sold privately.
Most of the home sales in the suburbs recording strong growth are by private sale, just like seven out 10 of all sales in 2010. This segment of the market is often overlooked because it lacks a regular statistic, for which the clearance rate provides for auction sales. To see a list of the suburbs ranked by method of sale, visit the REIV website.
This serves as a reminder for buyers and sellers that they need to look past the weekend clearance rate to gain a true appreciation of the market. To find out private sales results you can read the sales reports supplied by the REIV in The Age on Sunday and Monday, or visit propertydata.com.au and purchase in-depth reports.
Finally, I would like to invite readers to watch the only weekly TV show about the local market. On Melbourne Property TV, which screens Mondays at 8.30pm on Ch31 (44 on digital), you can find out about the local property market and listen to experts discuss a range of issues relevant to buying, selling or leasing.