The Melbourne housing market continues to slowly appreciate with another moderate rise in prices during April. The announcement of lower interest rates by the RBA will help bring more buyers into the market if passed on by all the retail banks.
The REIV House Price Index (HPI) for Melbourne increased by a 0.6 per cent in April 2013 to reach 139. The Unit Price Index (UPI) also improved by 0.5 per cent to 136.6.
The index shows that in normal terms house prices are now only 3.6 per cent below their peak. From a geographic perspective prices are closest to their peak in outer suburbs.
Once inflation is taken into account Melbourne house prices show moderate growth. They are however 8.5 per cent lower than their peak in 2010 with a HPI of 118.6 compared to a peak of 129.6.
Transaction levels are higher than last year but still below medium term averages.
Over the past five years there has been an average of 9,400 sales during April across the state. The REIV estimates that there were approximately 7,100 sales in the April this year. This is lower than the five-year average but is higher than the previous year when 6,800 sales were recorded.
The growth in sales volumes is remaining at best moderate. This is confirmed by the monthly release of the volume of mortgages released by the State Government. Unfortunately, after a strong January two months of negative net mortgages – less initiated than discharged – have been recorded. Even as prices edge upwards it is not reasonable to say the market has fully recovered until sales volumes show consistent increases.
The REIV’s analysis of the range of currently available data concerning the residential market and broader economy lead us to conclude that whilst the market is recovering it is at this stage a mild one.
*Article courtesy of Real Estate Institute of Victoria