Recent information from CoreLogic RP Data has shown that Melbourne’s median house prices are showing the fastest growth for an Australian capital in the past quarter.
The 5.2% increase, which has surprised experts, has topped the growth of all other cities across Australia.
CoreLogic RP Data have revealed that the average house value now rests at $641,500, a considerable increase of $55,100. That’s a median house price increase of 9.4%.
Despite a strong boost over the past 3 months, when extending the picture to look at year to date, the overall growth trailed slightly behind Sydney, which came in at 10.6%. The increase has left Melbourne as Australia’s second-most expensive city, once again falling behind Sydney which sits at first place with a median of $890,000. Canberra follows a close third at $625,000.
Experts at CoreLogic have commented on the increase, stating that it’s an encouraging indicator for the housing market. They have also noted, however, that it isn’t as strong an increase as has been seen in previous months.
Tim Lawless, senior analyst at CoreLogic, has compared the boom to the one seen between 2000-2004.
“Back then it was a slightly higher rate of growth actually, but very different economic conditions as well,” he said.
“Household debt was much lower for example and interest rates were higher and it was very similar in the sense that Sydney and Melbourne really started the boom but then growth actually spread to markets like Brisbane and Hobart and Adelaide and so forth, which really hasn’t happened as much this cycle. We have not seen that ripple out of capital gains into other markets as much as what we did the last phase.”
Melbourne’s median unit price also rose, but the increment wasn’t as significant as house prices. The 5.2% rise to the average unit value of $485,000, however, is adding near-on $24,000 to the city’s median unit price each year.
Tim Lawless addressed the concerns of an overabundance of units on the Melbourne market:
“I think that oversupply is affecting the performance of the markets that are oversupplied, and that is the key thing you need to remember that the supply situation in Melbourne and Brisbane is very much confined to a specific geography particularly around the inner city market, which in the grand scheme of things is certainly important, but it is only a very small proportion of the market that does look oversupplied.” he said.
He comments that this is also noticeable in the average unit price, which is seeing substantially less growth than that of houses.