Bullish investors take Melbourne property values to a new height
As it turns out, the slight fall in value in October is but a small blip in Melbourne's meteoric rise. Healthy appetite from investors looking to cash in on the upswing has ensured this trend was quickly reversed in the following month.
During November, median values rose by 2.69% according to Residex. Over the three months to November, median values jumped by 4.43% to $532,000. Year-on-year, Melbourne recorded a solid 10.95% increase. Unit values also grew strongly, jumping by 11.56% during the 12 months ending November 2009.
"Melbourne's housing market has been the front runner in 2009 recovery," says Paul Braddick, head of property and financial system research. "Market momentum remains strong with auction clearance rates resilient despite increased offerings, rising interest rates and the winding back of the first homeowner boost."
Melbourne also topped RP Data's best performing markets outside Darwin during the first 11 months of 2009. Melbourne racked up 17% growth, which Tim Lawless, director of rpdata.com, describes as nothing short of "extraordinary recovery". "Melbourne is a real surprise, with growth rate of 17% year-to-date, that's an incredibly strong market," says Lawless.
He says this impressive gain is largely fuelled by the availability of strategically located and affordable housing, an advantage over other major capital cities such as Sydney and Brisbane. "That's been one of the blessings for Melbourne. It's got strategic land supply, and has a government with progressive plan which has allowed it to release that land going forward," says Lawless.
Economic powerhouse
The underlying strength of the market also owes much to the dramatic increase in Victoria's population according Braddick. "After averaging annual gains of just 37,000 in the 1990s, Victoria's population grew by a record 114,000 in the year to June 2009. Consequently, demand for homes (both purchase and rental) remains solid and is driving prices and rents higher," he says.
Braddick also notes that the state economy has continued to outperform and has accounted for all the dramatic rebound in national employment in the past seven months and has the second lowest unemployment rate at 5.4%.
"Growth has been underpinned by solid infrastructure investment and will be boosted in the year ahead by a strong rebound in dwelling investment," he says.
"New road and rail transport infrastructure projects such as the $4.3 billion Regional Rail Express project which includes the linking of Geelong, Ballarat and Bendigo with Melbourne via dedicated express train services will boost demand for the housing in these centres and relieve some of the pressure on metropolitan Melbourne."
Housing finance continued to grow robustly with the number of housing commitments jumping by 22% above the longer-term averages, particularly driving overall activity in the construction sector, especially in the residential sector according to a CommSec report.
