Melbourne townhouse price largely unchanged: Secret Agent
GUEST OBSERVER
So far, the early parts of this year have been impacted by public holidays; this has reduced listing numbers and overall choice, which have been strong contributors to healthy clearance rates and strong competition by bidders.
Overall prices were down at the start of 2016 relative to the end of last year, which is mostly due to the cyclical nature of the property market. The month of March alone reveals signs of the trend reversing and property prices swinging up again. Many suburbs have left the “Bust” list, with only CBD apartments experiencing four consecutive rolling quarters of negative price growth.
Similar to last month, average house prices in the inner suburbs were down 2 percent over the rolling quarter. However, compared to March 2015, all inner regions saw increases in real prices: 8 percent in the inner South, 8.5 percent in the inner North and 14 percent in the inner West. Due to several multimillion dollar property sales in the inner East this month, real median prices are up over 33 percent since this time last year. As pointed out in Secret Agent’s recent blog post, these large fluctuations show the limitations of analysis using medians and averages within concentrated areas.
Prices of townhouses remained nearly unchanged this quarter compared to last, dropping by less than half a per cent. The average price per square metre was also identical to last month’s figure of $6,300, but is still well below levels seen towards the end of last year. Standalone houses on the other hand are closing the gap, with their median price per square metre nearing $5,900.
Median apartment prices are about 4 percent lower than at the end of 2015, while total listings are down slightly, remaining at over 3,200 combined across all inner regions. The market for apartments did not adjust correctly to the much lower demand for property at the start of the new year, which means the price decline is most likely due to an oversupply.
Compared to March last year, CBD apartments have gained a slither of real value, with median prices up 0.16 percent. Northcote and West Melbourne have seen two consecutive rolling quarters of negative growth. Collingwood was the only area to buck the trend, with apartment prices rising consecutively since November last year.
Secret Agent still believes that value in the property market is easier to leverage at the top end of the market and many buyers seem to share this sentiment: nearly 16 percent of all houses sold this quarter had a price tag of $2 million or more, with $7 million and $5 million value properties in South Yarra and Hawthorn having no trouble finding a buyer happy to exchange fortunes for keys. However, true value may still be much harder to find. For properties above $3 million, buyers on average paid $7,200 per square metre, which is well above the average for houses in the inner suburbs. Larger homes are increasingly being sold to developers who are optimistic about creating further value on these sites. Secret Agent plans to investigate true capital growth more deeply.
We believe that many figures that can be found readily on the web do not offer home buyers the real insights into the property market. Whenever a property undergoes change between sales, the price reflects the value added by the owners as well as the appreciation of the property itself. We’re excited to bring these findings to you over the coming few months.
Quarterly Scorecard
JAN - MAR 2016
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