Auction clearance rates consistently above 80% and a record number of first homebuyers entering the market are just a couple of the reasons property experts are feeling optimistic about Melbourne.
If Victoria is in the middle of an economic downtown, the property market certainly is no longer showing it.
On June 21, the Real Estate Institute of Victoria recorded its highest auction clearance rate in 18 months - 86% of 526 properties on offer sold.
There's no doubt the first homeowner grant boost is still playing a part. Victorian Treasurer John Lenders reported in June that nearly 5,000 first homebuyers entered the market last month - more than any time in the state's recorded history.
"These figures are not surprising," says David Harris, LJ Hooker franchise manager for Victoria and Tasmania. "Our offices, all across Melbourne, have been inundated by buyers."
He says it's led some auctions to see some very competitive bidding fights. That will happen when the clearance rate reaches above 85%. The clearance rate itself is not a broad indicator for all properties, however, but it is a good sign in general.
"Auction clearance rates are always a good guide, but it is difficult to draw a definite conclusion because it does not represent the whole market," says Harris. "However, it is a definite indicator of a clear growth trend when clearance rates are high for a period of time."
Most sectors of the Melbourne market have been strong, but the top end has still been struggling to find demand, and thus has seen continued price decline.
Anything over $1.3m is what local property expert Monique Wakelin of Wakelin Property Advisory has coined "the margin call belt."
"People have suffered there, and most of the forced sales have been the result of margin calls," she says.
What it has done is make it a lot easier for a homeowner already in the $600,000 to $900,000 mark to trade up to the higher end, says Wakelin.
Expect this week top end to continue for a while ahead, she says. Angie Zigomanis, an industry analyst and economic forecaster for BIS Shrapnel, agrees the economy will continue to hurt certain sectors of the market.
"The weak economic environment will continue to be a dampening factor on price growth in the Melbourne market during 2009/10," he says.
But Zigomanis has still endorsed BIS Shrapnel's latest prediction of 19% growth in the median house price over the next three years. A key factor he says is the rising deficiency in dwellings, pushing up rents while lower interest rates keep yields for investors strong.
"This is likely to encourage demand as economic growth begins to strengthen in 2010," Zigomanis says.
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