With turnovers getting lower and lower it is nearly impossible to give a week by week update on the Melbourne property market. There were only 193 properties actually sold at auction and this would include all properties that passed in and were sold subsequently during negotiations. The overall REIV clearance rate which includes all properties sold during, after and before auction was 59% but this is a relatively small total of 384 listed auctions. And it still leaves 15% (58) auctions with no listed result. There were 519 private sales reported to the REIV last week.
These numbers might give us a “snapshot” of what is happening on any given weekend, I do not think they are useful for trending analysis. However if we continue to look at the Valuer general data I noted that the overall prices over the last 4 years have indeed risen quite well. In 2007 there were 132,422 Metropolitan residential sales with a total price of $57,148,863,639 for an average of $431,566. In 2011 there were only 84,397 transactions for a total of $46,829,983,251 for an average price of $554,877. This is an increase of over 25% per average dwelling price.
It is unfathomable how most people are still thinking about glass half empty. When people sell their properties that they have had for around 5 years or more on average, the prices have increased quite well. Not as well as historical 10 year, 20 year and thirty year averages, but still quite well. It is also unfathomable how analysts can still talk about the potential for 40% drops in median house prices when we have had such a low increase over the last 5 years. In fact when we look at historical evidence we can look at the median price movement in the 1990’s. The depth of the “recession we had to have” was around 1991 and the market stopped dropping in 1992. The Melbourne house median went from $125,000 in 1992 to $260,000 in 2002. This represents 7.60% increase per annum during these years. The median price movement from 2007 – 2011 has only been 6.9%per annum. Overall the turnover numbers are moving back to similar numbers throughout the 1990’s.
All eyes this week will be on the Reserve Bank board that meets tomorrow. Most “analysts” have guessed the board will not lower rates, but there is an option for them to do so as inflation has been kept well within their preferred band. If the Board takes confidence into account I would not be surprised if they moved 25 basis points tomorrow.
If you are considering purchasing a home in Melbourne, please feel free to give our office a call.
JPP Buyer Advocates