Since writing my first article in April warning of the precarious outlook facing the Melbourne housing market, Melbourne home prices have softened, falling by 2.0% in the 12 months to June according to the most recent RP Data release:
Although the median annual fall of 2.0% appears moderate in light of the huge run-up in Melbourne home prices since the beginning of 2007, the losses since the beginning of this year are much higher:
MELBOURNE’S median house price has lost more than $800 a week since the property market peaked late last year.
House prices have fallen 4.4 per cent from a December high and apartment prices are down 3.4 per cent after hitting their price ceiling in November, according to figures from property research firm RP Data.
Melbourne’s median house price hit a record $521,000 in December and has lost about $23,000, or $818 a week ever since.
The city’s median apartment price peaked at $440,000 in November and has since lost close to $15,000, or $468 a week.
And Melbourne’s home values look set to soften further, with the number of homes for sales continuing to increase steadily at the same time as sales volumes have slumped to decade lows and auction clearance rates have fallen to below GFC levels:
Now that the busy spring listing season upon us, industry representatives are encouraging vendors to lower prices in order to “meet the market” and absorb the excess supply. According to the Sunday Age’s Domain print edition (“Market not warming up just yet”, 26 August, 2011):
Warmer weather may be on its way but it will take much more for Melbourne’s property market to spring into action, with supply expected to continue to outweigh demand from cautious buyers over the next few months.
The Real Estate Institute of Victoria estimates there are almost 1800 auctions planned for the first three weeks of spring.
Although less than the 2107 auctions recorded for the same period in 2010, if current sentiment continues, the clearance rate is likely to drop further as the market attempts to soak up the supply…
In order for the increase in supply to be absorbed, vendors will have to meet the market, says Richard Wakelin from Wakelin Property Advisory…
With RP Data due to release its July home values index on Wednesday, it will be interesting to see whether Melbourne’s housing valuations confirm the above indicators and continue their downward drift.