Melbourne continues to shine
Following a record-breaking period of auction clearance rates, Melbourne continues to recover from the economical downturn.
Melbourne's auction sales have made the news again and again the last month, as clearance rates topped 80% for 17 consecutive weeks. Accounting for 30% of Melbourne's sales, these are a good indicator that the market is moving forward at a healthy pace - a big improvement on the previous 12 months performance.
"The auction rates are a huge sign of confidence in the market," says Cameron Kusher, senior research analyst at RP Data. "Vendors are more open to negotiation - they've realised the economic outlook is a lot brighter and that sense of panic has dulled.
"In the first seven months of 2009, Melbourne house prices went up 8%," says Kusher. "The only other city doing that well is Darwin."
Suburbs with potential
Kusher picks Geelong as an area showing particular potential. "It is still connected to Melbourne by the train line and freeway and there are employment drivers within the area," he says. "The Victorian government is offering incentives to build your own home in regional areas as a way of addressing undersupply and spreading the population out across the state."
It's an opinion shared by the REIV's president, Adrian Jones. "The residential market in Melbourne is going through a remarkable period of growth," he says. "The market looks very healthy."
Sales of homes over the $5 million mark have risen - a clear indicator that confidence has come back to buyers. The positive reports reflect the Victoria's market as a whole, with Jones highlighting the areas of Bendigo and Ballarat as performing particularly well.
Bendigo saw an annual growth of 8% up to July 2009 and a median house price of $192,000, while Ballarat saw 11% annual growth and a median house price of $190,000. However, Jones does say areas such as Sale and Bairnsdale are struggling to recover due to higher unemployment than other parts of the state.
"Generally the market is doing a lot better than anyone expected it would," says Jones. "Unit prices are a little higher due to land prices but we have a lot of investors moving back in to the state and a regional vacancy rate of under 2%."
In the June quarter, the suburbs with the most sales were Frankston, Point Cook and Sundbury. Unsurprisingly, the suburbs have been a hot spot for first home buyers, lured by the low prices and high levels of development.
Frankston stands out most from these suburbs thanks to its beachside location and developed infrastructure. Its median home price lies well below the Melbourne average of $368,000, at $236,000, while the average annual growth for the area is 11% compared to Melbourne's 6%.
While the first home buyers are expected to dissipate from September, following the reduction in the First Home Owner Grant Boost, established buyers and investors are expected to take up the shortfall.
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