Melbourne house prices rose by 33 per cent over the 18 months to December 2010, according to data from Australian Property Monitors. Melbourne's December quarter median house price of $574,850 is $141,546 higher than that recorded for the March quarter 2009.
Expectations are, however, that the Melbourne housing market is in for a quiet year with a pause in the rate growth.
Signs of reduced buyer activity emerged late last year as the impact on affordability of strong prices growth, together with seven official and one unofficial interest rates rises since October 2009, finally flattened buyer demand. By year's end high numbers of properties offered for sale and a lack of buyers had auction clearance rates plummeting.
Early signs are, however, that buyer sentiment may revive sooner rather than later in 2011. Early auction clearance rates are encouraging and the latest Bureau of Statistics housing finance commitments data for December 2010 surprised on the upside with continued growth in loans to owner-occupiers, despite the late-year rises in interest rates.
With a growing economy and rising incomes as a consequence of strong competition for workers in a virtual full-employment labour market, buyer capacity and sentiment may shift sooner than expected.
Dr Andrew Wilson is senior economist for the Fairfax Media-owned Australian Property Monitors.
Source: The Age