After a ‘quieter year’ in 2014, Domain Group’s senior economist Dr Andrew Wilson told Australian Broker the Melbourne market that looked to be moderating has turned around.
“The Melbourne market has stepped up a gear,” Wilson says. “It’s a market that’s certainly on the move…aspirational buyers, particularly to the eastern suburbs, continue to drive the market.
Last year, Wilson says “there were certainly issues that were emerging about underperforming economy, unemployment rate at the highest level in a decade. So there were some negatives there for the market.”
The median house price in Melbourne grew by 4.1% to a new median of $614,479 in 2014, although Wilson says this is about half of what it rose to in 2013 and unit prices have increased by 2.9% over 2014 to a median of $431,419.
Wilson said the city broke the record for an Autumn auction day last weekend with over 1400 properties auctioned, making it the third highest weekend ever for auctions in Melbourne.
He is expecting the market to ease over the Easter and ANZAC holiday periods.
“We’re in for a pause now until May and it’s a question of whether the market momentum can be maintained through the rest of the year.”
He said a mid-range forecast was around the 5% mark this year, similar to predictions for 2013.
“But if these activity levels continue we should see it move above 5%, around 7% mid-range, given we have the same sort of scenarios going forward.”
Wilson said falling rents in units are no surprise given higher levels of development in the inner CBD.
“It doesn’t have the same shortage of properties that other capitals have and therefore not the same prices growth in rentals,” he said.
“In Melbourne they are well below those in Sydney and expected to grow moderately at best this year.”