Melbourne metro house prices 5.2% cheaper than a year ago: REIV

Despite a modest recovery in the final quarter of 2011, the median house price in metropolitan Melbourne is down $30,000 compared with a year ago, according to the Real Estate Institute of Victoria.

The institute puts the median house price at $550,000, a minor increase of 1.9% from the revised September quarter median of $540,000, but 5.2% down on a median of $580,000 a year ago. 

The price decline equates to Melbourne metropolitan houses losing about $80 a day in value over the past year.

One of the best-performing suburbs of the quarter and the year was Prahran, with house prices up 14% for the quarter to $997,500 and 10.8% for the year. A year ago a house in Prahran cost $900,000, and the median in December 2011 is $997,500.

Affluent Kew recorded quarterly price growth of 36% with the median house price increasing from $1.18 million to $1.6 million (with about 60 Kew houses sold over the quarter, according to realestate.com.au) but does not feature on the list of the best-performing suburbs of the year, indicating some record sales over the final quarter skewed the results.

The far-outer Melbourne suburb of Mornington (an hour’s drive from the CBD) recorded 10.9% increase in house prices over the quarter, with house prices increasing $50,000 to $510,000. Quarterly house price increases of around 10% or more were also recorded for Kensington (12.4% up to $725,000) and Port Melbourne (up 9.7% to $911,000).

Balwyn North (7.9%), Blackburn (7.4%), Wantirna South (6.9%), West Footscray (6.2%) and Mount Waverley (4.8%) all recorded strong growth over the quarter.

Unit prices are down 4.2% for the year, with the median unit price falling from $475,000 to $450,000. Over the December 2011 quarter, units managed growth of 1.1%.

The strongest demand for units was recorded in North Melbourne, Armadale and West Footscray. 

Regional houses have delivered investors a better return over the past year, falling by just 0.8%. The median regional house price now stands at $312,500 compared with $315,000 a year ago. 

Of the three main regional centres, demand was highest in Bendigo, where the median house price increased by 6.3% to $294,000. In Ballarat the increase was 3.6% to $290,000 and in Geelong there was a drop of 2.3% to $380,000. 

“The REIV does not predict any significant change in the market during the March quarter as it is generally the quarter with the least activity, however we are starting to see signs that the market may have bottomed in 2011, and, if there are improvements in economic conditions, we may see an improvement in transaction activity from the second quarter of this year,” says REIV chief executive Enzo Raimondo. 

Source: REIV 

Commenting on the December quarter results, Raimondo says that demand in the local residential market improved marginally from the previous quarter, as did housing affordability, due to the two interest rate cuts; however, transaction numbers were significantly lower than for the same time the previous year. 

“REIV data confirmed that, overall, the median house price has not changed over the last six months; the key factors driving the current market are a combination of lower consumer confidence, a slowing state economy and an increase in supply,” he says. 

“Feedback from REIV members during the December quarter was that buyers are not as willing to buy and sellers are not as anxious to sell as they hold out for an improvement in conditions. 

“As we head into 2012, there is no doubt that housing affordability has improved with the combination of lower house prices and two interest rate reductions.”