Welcome back to our weekly market comment series. I hope each and every one had some sort of break over the festive season and are ready to get back to work in 2011.
Property affordability is again in the News. Demographia International has released a report ranking 325 cities around the world on property price median vs. median income. As has become usual, Australia has been on almost the very bottom of the unaffordability lists. Sydney, Melbourne, Adelaide and even regional centres such as Geelong and Ballarat get a mention. The study looked at cities in USA, Canada, UK, New Zealand, Ireland, China and Australia.
China, (Hong Kong) was by far the most unaffordable city, followed by many of the Australian cities then the rest were spread out over the 325 places. If we also look at whose economy has faltered during the GFC, we see that all but China and Australia has dropped prices dramatically over this period. Both Australia and China did not.
I think there is a good point that comes out of this study. It shows that the release of land on the fringes of the city should be made more affordable and easier to build on for the young first home buyers who wish to own their homes. However, the release of this land would not negate the want of most people to live closer to the CBD and as such continue to push prices up in the 0 – 20km radius of Melbourne.
The market this year will most likely be more stable than last year. I believe we will see a far more restrained growth, without the massive climbs and falls. The market in the more established areas of Melbourne should grow in the vicinity of 7% – 10% whilst I can foresee the outer fringe, “new estate” areas potentially showing a correction in the recent upward surges they have shown thanks mainly to the First Home Owner Grants of late
At JPP we look forward to assisting you with your future property needs. Please feel free to give us a call or drop in for a chat to talk about your next property purchase.
Ian James