“Warning bell! What not to buy” is the Theme of this month’s HTW Month in Review.
– After experiencing the cycle boom in the middle of 2012, property markets in Australia’s major cities have been booming.
– A new record median house price of $658,000 was achieved by the end of June and the inner Melbourne median price exceeded the million-dollar level at $1,027,500.
– Because of low interest rates and strong investment, it is expected that the Melbourne residential market will continue to grow in the future despite at a slower rate.
– This characteristic of strong market performance can also be identified by a strong auction market this year with an average clearance rate of 74%.
– Some middle ring Melbourne suburbs such as Ashwood and Vermont South have seen stronger market performance with the clearance rate hitting 95%
– Melbourne’s outer suburbs are still the best performance for long-term capital growth, particularly the north and south-east parts of Melbourne.
– In comparison, Docklands was the worst performer followed by South Yarra, Carlton, South Bank and East Melbourne, which have shown lower levels of price increase over the past ten years.
– The talk of an overpriced market has caused buyers to part with their money cautiously and with the property market booming, buyers are more worried about a property bubble and the possibility of significant price drops in the future.
– Harry Dent, an American economist and demographer, judged that the Melbourne property market was highly overpriced as the house prices in Melbourne have reached almost ten times income levels. – However, this opinion has been criticised by many local analysts and economists.
– Though it is difficult to determine whether the property market is overpriced, it has sparked fears of oversupply of new apartments in certain areas, such as the City of Melbourne.
– Around 3,000 apartments have been built in the Melbourne Council area in 2014 and another 3,000 units are planned to be completed by the end of this year. – This trend is expected to last for at least a few years into the future, mainly within Docklands, Southbank, South Yarra, Carlton and the CBD.
– However, it seems that investors do not pay enough attention to the potential disaster of oversupply as almost 50 developments are currently seeking planning permission from the local council. – Offshore investors contribute to more than 40% of residential developments in the city.
– At the same time, poor quality apartments with design flaws account for 55% of the city’s tallest apartment buildings according to a Melbourne City Council study.
– This has generated the current situation of almost 20% of house and unit losses on re-sale in the Melbourne Council area.
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Thanks to Alphabroker