Melbourne house prices at 4.30 in their cycle. with prices still falling: Experts

Melbourne’s housing market was one of the worst-performing markets in 2011, with the pace of capital decline picking up in the second half of the year.

According to Michael Yardney, different segments of the Melbourne housing market are at different stages of the property cycle.

“The top end of the market is at three o’clock, with an oversupply of property relative to the reduced demand for luxury property,” he says.

“There is more demand for properties in the middle end of the market – but there is still an oversupply of properties relative to demand.

“Builders and developers have got ahead of themselves, and there is an oversupply of newly built house-and-land packages in the outer suburbs. This will create downward pressure on property values in these locations,” he says.

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Time: 4.30

SQM Research’s Louis Christopher forecasts no real recovery in the Melbourne market until the third or fourth quarter of 2012, and he expects that any recovery will be modest.

Charles Tarbey is more bullish and says the Melbourne house market is close to bottoming out, with supply diminishing.

“As this happens Melburnians will become more excited about the residential property market,” he says.

WBP says established houses within 15 kilometres of the CBD have bottomed out while values for new houses further out will decline further.

“We expect activity in the established housing sector to improve in the first half of 2012. However, there is still an oversupply of new houses, which will see this market slightly under-perform in 2012,” WBP says.

Population: 4.1 million  

Median house price: $500,000 

House price growth in February 2012: 2% 

Annual house price growth to December 2011: -6.8% 

Annual house price growth to July 2011: -5% 

Rental yield: 3.5%

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Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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