Melbourne real estate in a flux

Posted on May 2, 2009 by peter 
Filed under Australia Real Estate News · Tagged: ,

propery-boom-bustRecent data from the Real Estate Institute of Victoria (REIV) reveals that residential property in the more affordable Melbourne suburbs are appreciating faster than those in traditionally affluent areas such as Toorak, Canterbury and Camberwell.

The REIV’s quarterly house price figures show that fifteen of Melbourne’s “top 20″ growth suburbs for the first three months of the year had a median price below $500,000.

Real estate industry executives say this is because of falling interest rates and first home buyers’ grants.

Suburbs with the fastest growing prices included Mount Martha, up 16.3 per cent to $500,000, Keysborough, up 12.9 per cent to $390,000, Epping, up 8.1 per cent to $303,000, and Boronia up 6.9 per cent to $355,000.

However, the overall Melbourne median house price fell 3.1 per cent to $410,000.

Prices for the cheapest 25 per cent of houses also fell, down 1.4 per cent, while the most expensive 5 per cent of houses dived 12.9 per cent.

That compares with data yesterday from rival analyst RP Data-Rismark, which is used by the Australian Stock Exchange, and which showed Melbourne houses rose 2.4 per cent to $426,423.

REIV chief executive Enzo Raimondo said the institute collected its data directly, and the results reflected about three-quarters of total sales.

He said the figures showed that while the first home buyers’ boost was clearly working to stimulate activity, it was not dramatically inflating prices, as some industry commentators had suggested.

“Everybody’s saying that the first home owners’ grant is pushing up prices but I think what’s happened is it’s helped activity, not necessarily driven prices up,” he said. “Growth actually slowed in all the parts of the market, whereas last time it was only the top.”

The number of transactions in the first three months of this year was about the same as in the December quarter, at just over 12,000 — even though January is traditionally very quite in real estate because of school holidays.

He said the financial crisis meant people were reluctant to sell their homes and stock levels were extremely low compared with the 2007 real estate boom.

Mr Raimondo said stock levels and transactions could drop further if governments removed their first home owners’ boosts as suggested after June 30.

The Federal Government has doubled its grants to $14,000 for existing homes and tripled them to $21,000 for new homes, while the State Government is offering $3000 for existing homes or $5000 for new homes.

However, Prime Minister Kevin Rudd last week suggested the boosts would expire as planned on June 30. Developers are calling for the boosts for new homes to stay, arguing that it is better to direct money towards construction than to owners of existing homes.

But Mr Raimondo said the removal of grants for new and existing homes would mean a drop in economic activity and employment.

“It’s going to affect transaction numbers, it’s going to affect competition, it’s going to affect how many people are going to be employed in real estate after June,” he said.

Home buyers forced to purchase in outer Melbourne suburbs

Posted on March 7, 2009 by peter 
Filed under Australia Real Estate News · Tagged:

First time home buyers are being being forced to buy a record distance from the city as low interest rates and higher first homeowner grants push up prices in once affordable suburbs.

Only 316 of Melbourne’s 2720 suburbs and towns have a median price below the average first home buyer’s budget of $277,000, new figures released by home seeker website Our Home Sweet Home.

“It is driving up prices and pushing many first-time buyers out of the market.”

Many traditional first home buyer suburbs have moved out of reach, including Derrimut, Caroline Springs, Bacchus Marsh, East Geelong, Sunshine North and West, St Albans, Hallam, Dandenong South and Campbellfield.

The median price in Caroline Springs, for example, rose 16.4 per cent to $324,500 last year while in Derrimut it rose 7 per cent to $365,500.

Mr Boehm said many first-time buyers were being forced to look farther out to find a home they could afford.

Many were being forced to buy up to 40km from the city in places such as Cranbourne, Frankston North and Melton.

The figures show that between the September and December quarters last year 46 Victorian suburbs or towns moved out of reach of the average first home buyer despite across-the-board affordability improvements. Only 19 new areas became affordable.

“It is a bit of a surprise that more suburbs are coming off the list than coming on to it,” Mr Boehm said.

He expected strong buying by first home buyers to continue to push up prices in their favoured areas as long as interest rates remained low.

“Interest in properties in the $250,000 to $350,000 bracket is intense, with demand often outstripping supply, fuelling bidding wars in some areas,” said the firm’s chief executive, Peter Boehm.