Market Report - Victoria (March 2008)

The Melbourne property market is heating up, but there’s still plenty of opportunities remaining for investors to buy into the booming city
Property values in Melbourne have spiked significantly in recent months, with Residex recording capital growth of 10.21% in the three months to November 2007. Over the year, property prices soared by 21.15% to $468,500, making it the third priciest capital city in the country behind only Sydney and Perth.
Real Estate Institute of Victoria (REIV) CEO Enzo Raimondo says that 2007 has been Melbourne’s residential property market’s best performing year since 2002, with auction clearance rates for 2007 up at 82% - 15% higher than 2006.
"Not only did demand increase, but also so did the number of auctions,” Raimondo explains.
“There were 30% more auctions than last year, with 29,718 homes presented for auction in 2007 compared to 22,257 [in 2006]. To put this into perspective, there were more homes sold under the hammer this year than there were presented for auction last year.”
Raimondo says the residential property has experienced its highest level of growth since 2002, driven by strong demand and the performance of the property market in 2008 will depend on the impact of recent rate increases or any further increases as well as impacts from changes in the costs of living linked to oil or drought.
Regardless of potential new interest rate rises, Braxton Chase CEO Andrew Donnelly believes that Melbourne’s solid run is set to continue through 2008, because he feels that the “positive market fundamental of 2007 that contributed to Melbourne being a star real estate performer should carry forward throughout 2008”. 
“Eastlink Motorway, the largest transport infrastructure project in the nation, is scheduled for completion by midyear,” Donnelly explains.
“The motorway should continue to stimulate residential markets in its vicinity, especially those in the southeast where affordability, enormous population growth and job creation will also influence demand.”
Donnelly believes that Melbourne is also benefiting “from a huge influx of skilled migrants”, many of whom are funnelling into growth regions on the city’s fringes.

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