Property Management Update
The residential rental vacancy rate in Melbourne is currently 2.4%, confirming that the city has moved from having a shortage of rental homes to a more balanced market.
REIV CEO Enzo Raimondo said that while the easing in the rental vacancy rate would be welcomed by Melbourne renters, the availability of rental homes in regional Victoria remains very low.
“The February rental vacancy rate in Melbourne indicates a greater availability of rental homes than is the case in regional Victoria, where the vacancy rate is a mere 1.4%. A vacancy rate of 3% represents a balanced market where renters are generally able to find a home and investors receive a decent return.
Raimondo further observed that within Melbourne there is a clear trend of higher vacancies the closer to the suburb is to the CBD. In the suburbs within 4km of the CBD the vacancy rate is 2.7%, the same as in December.
Within the suburbs between 4km and 10km of the CBD the vacancy rate is 2.6% compared to 2.1% in December. The middle suburbs have recorded a substantial easing from 1.2 to 2.2%. Vacancies in the outer suburbs have tightened from 2.1 to 1.6%.
It is unfortunate that while the overall level of vacancies is increasing, the level of affordable rental homes remains drastically low.
Source: REIV
Property Market Update
The REIV 2011 December quarter median prices confirm that house and unit prices remained relatively stable over the quarter. The median house price in metropolitan Melbourne was $550,000, representing a minor increase of 1.9% from a revised September quarter median of $540,000.
REIV CEO Enzo Raimondo said 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.
“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.”
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. The strongest growth in demand was found in Kew, Prahran, Kensington, Mornington, Port Melbourne, Balwyn North, Blackburn, Wantirna South, West Footscray and Mount Waverley; however, most of these suburbs recovered ground lost in the September quarter.
In contrast to the last few quarters, there was very little difference in the performance of the auction and private sale markets. Houses sold at auction recorded a median of $700,000, an increase of 1.4%, while those sold at private sale recorded a 0.7% increase to $478,444.
The performance of the unit and apartment market mirrored that of houses, with the median price increasing by 1.1% to $455,000. The strongest demand was recorded in North Melbourne, Armadale and West Footscray.
The median price of a house in regional Victoria rose by 0.8% to $312,500. 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 there are signs that the market may have bottomed in 2011and, if there are improvements in economic conditions, there may be an improvement in transaction activity from the second quarter of this year.
Source: REIV