The REIV have released their figures for the quarter ending June 30. They have shown an incredible rebound in house prices, up by a staggering 5.4%. If this were extrapolated out for the year it would equate to a 20%+ rise. Units are a little more subdued at a rise of 3.2%. WOW!! But just before you put on your party hats and begin to assume that all property prices are flying again, let’s look at the movement over a longer period of time.
The annual change from June to June for a house was only 5.7% so in fact the growth for the other three quarters was basically nil. This actually makes sense because the massive growth of the first quarter last year had to correct and it did so over the following three quarters. Looking at quarterly figures gives us these ridiculous movements.
Property is a long term venture and large long term gains are probable in many areas of Melbourne that you can purchase in. It is long term information that you require to make good choices. It is accurate information that will assist you in buying well. It is the experience of knowing what is a fanciful sound bite and what is good advice. Every time I hear that “property” is going to drop 40% I shudder. There is absolutely no evidence, foundation or even premise to base this on, but the media love to print it.
Good advice comes from sound information. The Valuer General of Victoria released its 2010 annual figures, which are for all intents and purposes, are as close to 100% accurate as any can be. For the period 2000 – 2010 during which we have had a downturn in the market in 2001 and also the GFC, the median house price in Melbourne have appreciated at 10.10% p.a.
Overall, Melbourne property prices are considerably lower than that of capital cities around the world. New York, London and Shanghai, are cities that people would pay almost double for a similar property to that which they can buy within the 5kms of the respective CBDs. I think you will find that over the next ten years we can envisage a similar or higher growth rate to that of the last ten years.
Property prices will continue to rise in Melbourne. Will the market take of next week, next month or next year, I am not sure. However it is not a matter of timing the market but time in the market. If you are buying for the long term in order to make money with very low risk, then buying as soon as you can afford to makes perfect sense.