Recovery takes hold on housing
The recovery in Melbourne's property market is gaining speed after house prices rose at the strongest rate in more than two years, according to new government figures.
The Bureau of Statistics reports that prices for the city's established houses rose 2.4 per cent in the three months to June, which is the third consecutive quarter of growth. The gain follows rises of 0.1 per cent in March and 2 per cent in December 2012.
Nationally, house prices were up 2.4 per cent over that period, with the latest results also marking three consecutive quarters of growth.
SQM Research managing director Louis Christopher said the performance for the national market was "quite strong" and set to continue on the back of the low-interest-rate environment.
"There is no doubt the recovery is taking hold. Given where interest rates are at, we're likely to see an acceleration in this recovery for a number of capital cities."
The Reserve Bank cut the cash rate by 25 basis points on Tuesday, to a new low of 2.5 per cent.
But the gains are tipped to be more moderate in Melbourne than Sydney despite the resurgence in the city's auction market, where clearance rates have averaged more than 70 per cent in recent months.
"What we're generally finding at the moment [is] the median house price ... increasing has to do with the better quality of the homes that are selling in the inner and middle suburbs," said Hocking Stuart director Rob Elsom. "There's a massive difference when you start looking at 20 kilometres out where the market is much softer."
The wider metropolitan market continues to struggle with a big stock overhang and tough conditions in the new homes sector.
SQM Research reports there were 46,748 homes for sale in Melbourne in July, more than double the number available in Sydney, which saw a 17 per cent decline in stock levels.
Building approvals, a key indicator of the health of the property sector, plunged 24.3 per cent in June to hit its lowest level in four years.
Shane Oliver, chief economist at AMP Capital Investors, said Melbourne's growth rate of 3.3 per cent over the year to June compared to 5.1 per cent nationally (and 6.1 per cent in Sydney) showed Melbourne's market was still "lagging".
House prices rose strongest in Perth at 3.4 per cent, followed by Darwin at 2.9 per cent, Sydney at 2.7 per cent and Brisbane by 1.9 per cent.