With interest rates low and property prices below 2010’s record levels, Victoria’s housing market gathered steam as 2013 progressed. And by the final months of the year, property was back in the headlines and those 2010 records began to tumble.
REIV CEO Enzo Raimondo said that by year end Victoria is expected to have recorded close to 110,000 sales, 80,000 of those in Melbourne, with the state’s 2013 housing clearance rate likely to be 71 per cent. Although that’s not at 2010’s high – 118,300 sales and 74 per cent clearance rate – the 2013 clearance rate was substantially up on 2012’s 61 per cent and 59 per cent in 2011.
“But the year did beat 2010’s record run of auctions – seven weekends with more than 1000 auctions in 2010, but nine such “Super Saturday” weekends in 2013. In November alone there were 4,600 auctions in Victoria – another record, beating May 2010’s tally of 4,455 auctions.
“Topping the auction tables at the end of that record-breaking November were two very different suburbs: inner-city Richmond, with 365 sales, where sellers took advantage of high prices and buyers grabbed homes in an area with great shopping and transport links, and Reservoir, with 321 sales. Reservoir’s size contributed to that tally, but also its attraction for buyers priced out of nearby northern suburbs such as Northcote, Thornbury and Preston and attracted by its big blocks and solid housing stock.
“Auctions grabbed a bigger slice of the market: in Melbourne they were close to 28 per cent of the year’s total sales– up 5 per cent on 2012 – and yet another record.
“Price growth was strong in 2013 with Melbourne’s September quarter median house price of $595,500 a new record and the city’s House Price Index reaching a peak of 150.6 in November – its highest level since the REIV began the index in June 2007. Melbourne median house prices rose 14.9 per cent in the year, the biggest increase since September 2010 when annual, seasonally adjusted growth was 16.1 per cent.
“Growth was stronger for houses than units – the HPI rose by 7.6 per cent over the year, while the UPI’s increase was 5.9 per cent. But for investors apartments were the big news, with REIV data over the 12 months to September showing the highest rental yields were usually for one bedroom or two bedroom apartments. In fact, it found the top three investments in Melbourne over the 12 months – the inner city university suburb of Carlton, affordable outer suburban Noble Park, and Melbourne city – were all one bedroom apartments.
“Over the year the median weekly rent for Melbourne increased by 3.1 per cent, but for units it was up by 5.9 per cent – almost entirely driven by inner suburban rental growth, while the middle and outer suburbs remained stable.
“Falling vacancy rates were also good news for investors buying to rent. For Melbourne as a whole the rental vacancy rate fell to the lowest it had been all year in October and November– down to 2.7 per cent , from 2.9 per cent in September. In regional Victoria fortunes were mixed across the state, with differing rates of house and unit price growth, varying rental vacancy levels and median rental growth.
“REIV’s September median house price data showed the median house price in regional Victoria was stable, with a 0.8 per cent increase in seasonally adjusted terms to $308,000. However, the three main centres of Geelong, Ballarat and Bendigo continued to outperform that broader market. November’s House Price Index showed all three at their peak.
“All three recorded increases for the month, although growth in Bendigo slowed – an increase of 0.2 per cent, compared with 0.3 per cent for regional Victoria – but is tipped to pick up when the New Bendigo Hospital project is fully underway.
“The number of days homes were on the market in regional Victoria fell to its lowest level in almost two years in October – just 92 days. In November that rose to 104 days, still below the September figure of 113 and well below January’s 127 days. Most house sales in regional Victoria are private sales. Generally, less time on the market reflects a stronger market.
“In November the rental vacancy rate in regional Victoria fell to 2.4 per cent, down from2.9 per cent in October and good news for investors –this was significantly down on the 4 per cent rate at the beginning of the year.
“The strong market in the second half of 2013 excited commentators and led to predictions the New Year fireworks would herald a red hot market next year. But despite the good news there were signs of declining clearance rates towards year-end and we expect more moderate growth next year, potentially slowing mid year. Much will depend on factors such as the unemployment rate and consumer sentiment,” he said.