Melbourne Housing Market Slowing

The Real Estate Institute of Victoria March quarter median prices confirm that the four successive interest rate increases over the last 8 months has had an impact on Melbourne house prices.

REIV CEO Enzo Raimondo said that the median price for a detached home in Melbourne in the March quarter is now $432,500, down 8.4 per cent from the December 2007 median of $472,250.

“Increasing interest rates, coupled with the changing economic conditions have affected confidence, transaction numbers and clearance rates all of which have combined to cool the market since the beginning of 2008. The first three months of 2008 has seen the residential property market return to a stable and sustainable level. It appears that the greatest impact has been in the more expensive suburbs of Melbourne during the quarter.”

This is highlighted by the fact that the most of the suburbs with the highest growth rates for the quarter are not in the inner city. For instance Berwick’s median increased by 13.6 per cent, Moonee Ponds by 8.3 per cent, Ringwood by 6.4 per cent and Pascoe Vale whose median increased by 6 per cent.

Regional Victorian centres have defied the trend in Melbourne over the quarter. Ballarat’s median increased by 2.1 per cent to $239,950, Bendigo’s increased by 5.3 per cent to $240,000, Geelong’s fell by 0.8 per cent to $325,000.

“It appears the RBA’s strategy has had the desired effect on residential property and any further increases should not be necessary in the short term,” Mr Raimondo concluded.