Melbourne housing market on rebound
The latest price data from the Real Estate Institute of Victoria also shows a handful of inner and middle suburbs have seen their median house prices reach a new peak.
This included Brighton, which broke the $2 million barrier for the first time.
A lull in activity after the Christmas holidays historically makes the March quarter the weakest period for the city's property market, but this year it bucked the trend on the back of low mortgage lending rates and rising auction clearance rates, according to the REIV.
Melbourne's median house price fell 0.9 per cent over the three months.
This represents the lowest decline for the period since March 2001. (Seasonally adjusted, it rose 5.1 per cent over the quarter.)
"It's the strongest March quarter we've seen in more than a decade," the REIV's Robert Larocca said.
"Generally speaking, it's the inner and middle suburbs that have been pushing the growth, but the rises still aren't occurring across the board."
The auction clearance rate rose to 67 per cent in March, up from 60 per cent the year before.
Four suburbs in different parts of the city - Brighton, Doncaster, Northcote and Yarraville - have even regained all the price growth lost during the slump, and hit new peaks.
But the REIV sounded a note of caution in the light of the state's weakening economy, soft employment conditions and flagging consumer confidence.
"While the market is in an upswing phase, it's not going to be like 2009-10 when we saw 18-20 per cent price growth," Mr Larocca said. "This is much more moderate."
Louis Christopher, managing director of the analyst group SQM Research, said Melbourne appeared to be entering a "modest" and "tentative" recovery phase. "There is still a lot of property on the market that has not sold, and our own data indicates many vendors are still having to reduce their asking prices," he said.
The latest figures follow mixed messages about the state of the economy, property sector and consumer confidence.
Earlier this week, the Westpac Melbourne Institute Index of Consumer Sentiment fell sharply, emphasising how fragile consumer confidence had become "in the current environment".
But soon after, another Westpac survey found consumers' confidence that prices would rise was at its highest since July 2010.
Earlier this week, at a Bloomberg economic conference, an academic, Steve Keen, claimed that the recent house price growth was the result of speculative investor activity. "All the growth in debt has come from people speculating on rising house prices, not by people owner-occupying," he said.
"I think we're going through a rally - I'm calling a suckers' rally."
But senior economists from Westpac and National Australia Bank said Australia would experience some modest improvement in home prices, though home buyers would remain conservative about taking on debt.
"We're not looking for another huge surge in prices or activity that we saw in, say 2009, or that we saw in 2001," Westpac's chief economist, Bill Evans, said.
cvedelago@fairfaxmedia.com.au
Twitter: @chrisvedelago
sjohanson@fairfaxmedia.com.au
Frequently Asked Questions about this Article…
The Real Estate Institute of Victoria (REIV) says the March quarter was the strongest for Melbourne in more than a decade. While the median house price fell 0.9% over the three months, seasonally adjusted figures show a 5.1% rise for the quarter, and auction activity and lending conditions helped the market buck the usual post‑Christmas lull.
A handful of inner and middle suburbs hit new peaks, including Brighton (which broke the $2 million barrier for the first time), Doncaster, Northcote and Yarraville — these suburbs have regained the price growth lost during the three‑year slump.
Melbourne’s auction clearance rate rose to 67% in March, up from 60% a year earlier. Higher clearance rates signal stronger demand at auction and can support price stability or rises, so investors often watch clearance rates as an indicator of market momentum.
Recovery appears modest and tentative. REIV described the upswing as moderate (not like the big surges of 2009–10), and SQM Research noted many properties remain unsold and some vendors are cutting asking prices, so the recovery is real but not uniform across the market.
The REIV warned that a weakening state economy, soft employment and flagging consumer confidence could limit the market. Westpac’s Melbourne Institute Index showed a sharp fall in consumer sentiment, although another Westpac survey found confidence that prices would rise was at its highest since July 2010 — overall signals are mixed.
Views differ. Academic Steve Keen argued recent growth is driven by speculative investor activity and rising debt, while senior economists from Westpac and National Australia Bank expect only modest improvements and say home buyers will remain conservative about taking on debt.
According to senior economists quoted in the article, buyers are likely to stay cautious about taking on debt. The market is improving modestly, but it’s not expected to replicate past large surges, so everyday investors should be prudent about leverage and realistic about likely gains.
Historically the March quarter is the weakest due to a post‑Christmas lull, but this year it bucked that trend. The 0.9% fall over three months was the smallest March decline since March 2001, and seasonally adjusted data actually showed a 5.1% rise over the quarter.
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