The last decade in Melbourne has been the most volatile on record

RP Data’s median house and unit prices in Melbourne extend over nearly 40 years from 1974 till now.

It clearly shows that the last decade has been the most volatile proceeded by much more moderate cycles in house prices.

The first comparatively rapid rise in prices was in 1988 through to 1989 when median prices of houses rose by 42% in two years. After this median prices fell and otherwise stagnated before once again reaching their previous peak eight years later in 1997.

Another period of reasonably strong and rapid appreciation occurred through 2007 and into early 2008 when the median house prices rose 20%.  Nearly half that rise was lost in 2008 as prices fell.

Unlike previous cycles there was little to no gap until the next growth phase when over 2009 and 2010 median prices rose by 37%.

Until the last decade sharp falls in prices where not common but they have been a recent feature of the market and are a sign of its volatility.

One reason for this difference was the shock of the financial crisis, which resulted in not only confidence sharp fall in consumer confidence but also a matching boost to the market through the stimulus program.

The ongoing hangover from the financial crisis, a significant fall in the rate of housing credit growth and lower levels of consumer sentiment have led to more volatile times for the housing market.


Robert Larocca is Victorian housing market specialist for RP Data.

 

 


Robert Larocca

Robert Larocca

Robert Larocca is Victorian housing market specialist for CoreLogic RP Data.

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