Melbourne house prices up 1.6% in June quarter to lead 0.4% national gain: Australian Property Monitors

Melbourne was the strongest performing capital city detached housing market over the June quarter, recording a 1.6% rise to a median of $531,167, according to figures compiled by Fairfax's Australian Property Monitors (APM).

Dr Andrew Wilson, senior economist at APM, says the Melbourne market is being driven by demand at the lower-end and top-end of the market.

"We've seen a big lift in first home buyers since the announcement of the end of state incentives which has brought demand forward," Wilson told Property Observer.

"In May this year we had the highest numbers of first home buyers since first home buyer incentives were introduced in 2009," he says.

There has also been "solid resilience in the top end leafy suburbs" with prices rising off a low base.

In addition, Wilson says there has been improved affordability and interest rate cuts – though oversold as a driving force – have also been a significant contributor to the recent stronger performance.

Furthermore, auction clearance rates have also pushed up of late.

"It will be interesting to see, when this wave of first home buyers are out of the market, whether the upper end resilience can sustain the market over spring."

"The middle section of the market is always susceptible to the wider Melbourne economy and things like wages growth."

"The Melbourne market is on watch."

Wilson's explanation aside, the APM data is likely to create more confusion for investors and buyers as to the direction of the Melbourne market, with other providers recording different results over the same period of time:

• RP Data-Rismark recorded a substantial 3.1% drop in Melbourne house prices over the June quarter to a median of $517,500, though it did record a 1.4% gain over the month of June, with Rismark CEO Ben Skilbeck saying the market had “rebounded”.
  
  
• Residex recorded a 1.3% fall in Melbourne house prices over the June quarter to a median of $555,500 and a 0.5% fall over the month of June.

• The Real Estate Institute of Victoria (REIV)’s results could be read as the most bullish, with the institute recording a 2.9% gain to $535,000 over the June quarter, with the metropolitan Melbourne market described as “steady”.

Nationally APM reported little change in house and unit prices with house prices up 0.4% to a median of $536,075 and unit prices down 0.8% to a median of $411,810.

Over the 12 month period to June, house prices are down only 1.6% while unit prices are unchanged.

Sydney and Perth house prices hardly moved over the quarter – both up 0.2% to medians of $642,425 and $536,151 respectively.

Among capital city unit markets, the trend was down, led by Perth (down 4.5% to a median of $348,960) and Hobart (down 3.9% to a median of $260,393) with Sydney unchanged and a 1.2% fall recorded in Melbourne.

Only two capital cities recorded gains in their median unit prices over the quarter, led by Canberra, recording a 2.5% gain to a median of $421,339 and Adelaide, up 1% to a median of $296,802.

Commenting on the June quarter data, Dr Andrew Wilson, senior economist at APM, says that following a subdued period of buyer activity, “most Australian capital city housing markets appear to have bottomed out in the December quarter 2011, with modest price growth evident over the first two quarters of 2012 in Sydney, Melbourne, Perth, Canberra, Hobart and Darwin."

“Brisbane and Adelaide however are the exceptions, with no clear signs of median house price revivals in those markets,” he says.

“This trend towards modest improvements can be expected to continue in most capital city markets over the second half of 2012, underpinned by the prospects of an active spring selling season signalled by recent improvements in auction clearance rates, recent interest rate cuts and positive ABS home loan data.”