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Calm in Melbourne property market supports investment

February 14, 2012

The good news is that after the softness of the property market over the last 18 months, we are seeing signs that the Melbourne market has stabilised and that we are entering a new cycle, affording investors a rare opportunity to buy high grade property at much more affordable prices. This is supported by a slew of recently published December quarter property data:

Melbourne property values percentage change

Provider

Quarterly Change
Dec 2011

12 month change
to Dec 2011

REIV

+1.9%

-5.2%

ABS

-1.6%

-6.1%

RP Data Rismark

-1.4%

-6.1%

Residex

-1.0%

-3.3%

Australian Property Monitors

+1.1%

-3.1%

Average of five reports

-0.2%

-4.8%

 

Market confidence has been boosted by the cuts in the Reserve Bank’s cash rates in November and December and the passing on, somewhat grudgingly, by the banks.  This translated into a modest increase in attendances and bidding activity at auctions in November and December and we are seeing greater numbers through open-for-inspections already this year.

In addition, the consensus from the many rental property managers we talk to is that the inner suburban Melbourne rental market has improved markedly in recent weeks.  Properties are leasing promptly and rents are rising.  Strength in the rental sector is often a good indicator of improved conditions in the investor-focused property market down the track.

In our view, today’s stable market offers prospective investors the ideal conditions. With a good supply of property and transparent prices, a willing but not anxious buyer has the time and opportunity to ensure they buy a quality asset.  And, as you know, buying quality assets is the key to successful property investment.

Image: markuso