Spring 2009 Property Review: Melbourne

Prices some vendors thought they may never see in their suburb again, are being exceeded, not only in the government-grant driven “sub $500,000” median value suburbs – but at the middle, and top end, where new price records have been smashed, sometimes more than once.
The ritzy suburb of Brighton for example had a record $12 million home sale reported in June, followed by a $15.5 million sale in August.
So buoyant is buyer demand – even imminent interest rate rises and the eventual winding down of government grants doesn’t appear to be cooling down the current bubbling market.
Australian Property Monitors economist Matthew Bell says median values in many Melbourne suburbs are higher today than they have ever been.
He said whereas in the recent past low interest rates, government grants and rising population have driven the market, there are new drivers at play now – including business and job security, and a new confidence by investors, who have been waiting for the bottom of the interest rate cycle, and are now reported to be competing with first home buyers for stock.
Strong international and interstate investment is also helping sustain Melbourne’s real estate market, according to APM, which is owned by Fairfax Media, publisher of The Age.
“Winter has been extraordinarily strong in Melbourne, at times even stronger than the historical 2007 highs,” Mr Bell said. “All indications are that its September quarter is going to be just as strong.”
“We’ve seen the bottom of [median] values pretty much around the country,” Mr Bell told Domain, adding those risk takers who purchased homes in the second half of 2008, and the early months of 2009, without yet knowing when the market had bottomed, may have snared the best buys of the cycle.
Mr Bell expects that as interest rates rise, the speed of the current real estate recovery should moderate throughout 2010.
He said Spring 2009 may mark the end of a mini-spike in Melbourne’s real estate markets, but does not expect values to go backwards next year.
APM says suburbs to experience strong median house value growth over the past 18 months include Tullamarine in the north-west, Kingsbury in the north, and Hampton Park in the south-east.
Deer Park, about 17 kilometres west of the city, was one of metropolitan Melbourne’s best performing suburbs reporting a 31 per cent increase in median value to $307,750, from the December 2007 peak, to June 2009, according to APM.

Share or Recommend article

Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of realestatesource.com.au.