Interest rate rises have seen Melbourne's performance figures drop from last year's astonishing levels, but population growth and low vacancy rates will keep its property market strong and active.
Melbourne's property market has seen quite a slowdown in capital growth rates from the dizzy heights that it achieved last year. Residex data from the last three months showed Melbourne's annual capital growth rate for houses has dropped from 19-20% during February and March down to 15.38% in April. The figures for units tell a similar story, with annual growth rates once again dropping from 19-20%, but this time to a slightly lower level of 14.3%.
Real Estate Institute of Victoria (REIV) CEO Enzo Raimondo states that the slowdown in Melbourne's capital growth is largely down to interest rate hikes, and believes that this recent property market stabilisation indicates that further rises should not be forthcoming in the near future.
"Increasing interest rates, coupled with the changing economic conditions have affected confidence, transaction numbers and clearance rates all of which have combined to cool the market since the beginning of 2008," says Raimondo.
"The first three months of 2008 has seen the residential property market return to a stable and sustainable level. It appears the RBA's strategy has had the desired effect on residential property and any further increases should not be necessary in the short term."
Residex's April statistics put Melbourne's monthly capital growth for houses in the negative column at -0.74%, while the rest of Victoria fares little better at 0.38%. Units show negative growth for both Melbourne and the rest of Victoria (-1.2% and -0.25% respectively).
Andrew Donnelly, CEO of property research firm Braxton Chase, agrees that Victorian property investors have no reason to panic and believes that Melbourne in particular is still seeing a big demand for houses.
"The residential property market of Australia's second largest city has seen growth drop from the phenomenal levels of the past year, and the markets in several outlying areas have flattened or started to trend downward. But the fundamentals in Melbourne are still strong."
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