MELBOURNE STILL SURGING AHEAD

21-Nov-2016

/

Author: 3004 Magazine - St Kilda Road News

The Reserve Bank has concluded that the property forecast is a slightly "more complicated" one for the country as a whole, however Melbourne continues to buck the trend seeing steady growth and strong total returns.

The RBA’s conclusion comes off the back of rising prices in Melbourne and Sydney, and a declining Perth market. Also the combination of low property turnover with credit growth has resulted in their decision to keep cash rates on hold for a second consecutive month to November.

The Melbourne property market continues to see steady growth and strong total returns - rising 9.1% in the year to October, according to CoreLogic. Higher yields and accelerating capital growth in both Canberra and Hobart are slowly bridging the gap between the Melbourne and Sydney markets. Minutes from the RBA’s November 1 monetary policy meeting show other factors are making it harder to forecast.

"Assessing conditions in the housing market had become more complicated. While overall conditions had eased relative to 2015, some indicators had strengthened over the previous few months. In particular, housing price growth had picked up noticeably in Sydney and Melbourne” the minutes reveal.

“However, housing turnover and growth in housing credit both remained lower than a year earlier, consistent with the supervisory measures that had been taken to tighten lending standards and the more cautious attitude to lending in certain segments.

In addition, a considerable supply of apartments is scheduled to come on stream over the next few years, particularly in the eastern capital cities, and growth in rents in the September quarter was the slowest for some decades.” the minutes said.

Housing price growth in Melbourne had increased noticeably since earlier in the year, with members also noting the high and rising population growth in Victoria. Population inflows from both overseas and other parts of Australia had supported conditions in Melbourne's housing market. This was evident on November 12, with Director Baden Lucas knocking down 402/86 River Esplanade, under the hammer for $870,000 ($70,000 above reserve).

The strong value growth of Melbourne in recent years has continued to be a key factor resulting in demand from the investment segment. Over the past year, total returns have begun to accelerate in some Australian capitals, although value growth in these cities has not been as strong as Melbourne and Sydney, as their superior rental returns are resulting in stronger total returns.

To find out more about existing local buyers and tenant demand, or to discuss the investment potential of your current property, call 9091 1400 or visit lucasre.com.au

This editorial was published in the summer issue of 3004 Magazine - St Kilda Road News.