Home values in Australian cities recorded a 3.8 percent growth in the first four months of the year owing to the strong market conditions particularly in Sydney and Melbourne. This is according to the CoreLogic RP Data Home Value Index.
The index report, however, noted a drop by 0.9 percent for prices in May due to a natural correction from the previous strong month on month results. This is the first month on month fall since November 2014 but which is believed to not continue for the rest of the year.
Tim Lawless, CoreLogic RP Data head of research, revealed home values in Melbourne recorded the second highest rate of growth at 22.4 percent, up by 9.8 percent over the past 12 months. He attributed the February and May cuts in interest rates and rise in investor interest for the increase in the yearly house price growth rate across Sydney and Melbourne.
Lawless also noted that the rate cuts led to houses in Melbourne and Sydney selling in record time. Homes in Sydney are now selling in as short as 26 days while those in Melbourne are selling in 32 days. But whilst Melbourne is cheaper than Sydney, it is still considered to be expensive to buy into inner and middle suburbs for many.
Majority of house (96%) and unit sales (90%) in Melbourne were profitable. On the contrary, the CoreLogic RP Data Pain and Gain report showed the city recorded a 24 percent unprofitable home sales in the first quarter of the year with an average loss of $34,301 totaling $5.81 million. The figure was an increase by 17 percent of the sales that made a loss in the last quarter of 2014.
Melbourne Market Condition
Melbourne is currently enjoying a strong economy and one of the highest levels of new housing supply notably in the new apartment sector. Growth in unit values in the city was 2.9 percent, lower than the detached housing sector.
In terms of rental yield, Melbourne has the lowest with a gross yield of 3.2 percent for a tyipcal house. Units have recorded a higher gross yield at 4.3 percent on the average.
The median house price in Melbourne is currently $560,000 making it more affordable compared to Sydney’s $722,000. Real estate experts point to the May rate cut as the key factor in maintaining the city’s housing affordability.
By Wendy Chamberlain
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With a passion for all things real estate spanning 18 years, Wendy loves that her role as a
