Following the record breaking 2015, the state’s property market was closely watched by all in 2016. While the Australian residential property market slowed in most states in 2016, Victoria’s market defied the trend and remained solid, gaining strength throughout the year. Though transaction volumes have been down from 2015 levels, the median house price has continued to increase in 2016 and clearance rates are the best since 2009. As the year draws to a close, it is timely to review the market in 2016 and the outlook for Victoria in 2017.
Transactions and auction volumes
Transaction volumes in Victoria have been lower than last year with an estimated 121,600 sales in the year to November 30.
In the year to November 30, around 35,000 auctions have been held with over 26,000 homes selling under the hammer. About 32,700 of those auctions were held in Melbourne, compared to 2,400 in regional Victoria where private sales are more popular.
2016 has been characterised by lower transaction volumes, higher median prices and higher clearance rates making it an ideal sellers’ market. The year for auctions is set to end strongly with December shaping up to challenge the all-time record number of auctions for the month – and, given the recent clearance rate, is certainly likely to exceed the auction sales record set last year (2459 auction sales).
Median price growth
Significant house price growth has been recorded in metropolitan Melbourne throughout 2016 with the median reaching the $740,000 mark for the first time ever in the September quarter. Growth has been widespread across the city, with price increases recorded in all three regions – inner, middle and outer.
Growth has been consistent during the year. In the first quarter of 2016, the median house price topped rose a modest 0.7 per cent to $713,000, up from $708,000 in December 2015. Outer Melbourne was the best performing area of Melbourne, with most of the top growth suburbs in the north and west of Melbourne.
Solid price growth continued in the June quarter with metropolitan Melbourne’s median house price reaching $735,000, up 3.6 per cent from March. Growth was widespread across Melbourne and at both ends of the market – from Toorak to Wyndham Vale and Roxburgh Park. Double-digit growth was experienced in Camberwell, Prahran and Richmond. Significant growth was also recorded in affordable suburbs - Hillside in the city’s outer North West, St Albans, Sunshine West and Sunbury.
The September quarter saw the city’s median house price rise 3.2 per cent to a record high $740,000. Melbourne’s inner and middle suburbs were the main growth drivers in the September quarter with house prices in these regions up 4.2 and 3.5 per cent respectively. The top growth suburbs in the September quarter were widespread across the city – from Seaford in the outer south east to Williamstown and Werribee in the west.
House prices have also increased in regional Victoria over the year, although at a more moderate pace, with the median house price hitting $348,500 in the three months to September 30. This was up from $347,500 in the first quarter of 2016.
Million dollar suburbs
Buyer demand in traditional million dollar suburbs has pushed up the median house price in neighbouring areas. As a result of the ripple effect, more of these suburbs have joined the million-dollar club this year. There were 77 suburbs valued at $1 million or more in the March quarter, and this has since increased to 104 in the September quarter. There are in fact now 13 suburbs with a median price of $2 million of more, with Toorak remaining Melbourne’s most expensive suburb with a median house price of $4 million. This is followed by Malvern and Canterbury with median house prices of $2,961,000 and $2,388,000 respectively.
Toorak also led the list of top end sales this year, with 43 homes selling at or above $5 million, well ahead of Brighton, Kew and South Yarra.
Strong clearance rates and high auction numbers to late 2016 indicates a strong finish to the year for auctions.
Melbourne is Australia’s fastest growing state and with a robust economy and low interest rates, buyer demand is likely remain strong.
Across Melbourne, the market is likely to remain steady, with solid results in a range of areas across the city.
While listings remain low and clearance rates high, the REIV expects median house prices to increase once again in the December quarter followed by the traditional slowing in January before picking up again by March.
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