Melbourne property market shows revival

Posted on February 22, 2009 by peter 
Filed under Australia Real Estate News · Tagged:

Real Estate agents say that plummeting interest rates are reviving Melbourne’s property market.

The Reserve Bank has cut rates 5 times since August, slashing the official rate from 7 per cent to 3.25 per cent.

While those who fixed their home loan at last year’s higher rates have seen no relief, falling home loan rates have helped contribute to a clearance rate of 77 per cent this weekend.

But Real Estate Institute of Victoria data shows there are still fewer than half as many auctions than the number achieved during the boom times a year ago.

There were 436 auctions over the weekend, compared to 1146 at the same time last year, as tight-fisted vendors opt for private sales to avoid expense.

About $289 million worth of property was sold by private sale at the weekend, compared with $207 million sold under the hammer.

Top-end property again struggled, with few auctions in the prestige suburbs of the inner south-east.

Hocking Stuart Carlton agent Scott McElroy said low rates made buying a house more attractive compared to renting.

“To think that home loans rates could be under 5 per cent has made buying a house look very attractive,” he said.

Treasurer Wayne Swan won’t apologise to families who fixed their mortgages when he was warning of an inflation crisis.

Reserve Bank Governor Glenn Stevens has revealed a 20 per cent surge in those fixing their mortgages in the first half of last year, before interest rates started to tumble.

They are now paying well over the standard variable rate and face $20,000 fees to unfix their loans.

Mr Swan said economic conditions changed rapidly and it wasn’t the Government’s fault.

“Those people are certainly in a very difficult position,” he told Channel Ten’s Meet the Press.