The 2015 property market has begun solidly, buoyed by low interest rates, with the cash rate kept on hold by the Reserve Back recently, at its 2.25 per cent record low. Despite some economic uncertainty around employment levels, consumer confidence has picked up since the March interest rate cut. This is flowing through to the property market.
Price growth has continued to strengthen, with the REIV House Price Index (HPI) for regional Victoria rising by 0.9 per cent in March 2015 to 133.5. The HPI also rose in Melbourne, increasing 0.8 per cent to 171.6. A key contributor to the regional increase was Geelong, with the index for the region up 0.4 per cent in March.
The auction market, which is a key determinant of activity in regions close to Melbourne, continues to grow. In the year to date, there have been 7600 auctions statewide, with most of these – 4200 auctions – in March.
The 76 per cent statewide clearance rate for the year to March 31 was the highest for five years. We expect that in the short term the low interest rate environment will continue to drive demand.
More broadly across the state, private sales continue to be common, and statewide in March there were 10,780 sales in total – an increase on March last year when there were 10,600 private sales.
For investors in regional Victoria there was some good news with the rental vacancy rate stable at 2.1 per cent in March and 50 basis points lower than a year ago.
While the rate actually eased to 2.8 per cent in both Ballarat and Bendigo, both of which have been experiencing severe accommodation shortages, in Geelong it has been tightening for the past six months. The rate of 3.1 per cent there is at its lowest since April 2013.
Median house rents across regional Victoria were stable at $300 a week, while median unit and apartment rentals were up $5 to $245. Median unit rents in Geelong were up $10 to $290 and Ballarat were up $30 to $240. Both vacancy rates and house rents in Melbourne’s outer suburbs remained stable, while unit rents there increased from $316 to $320.
*Article by: Enzo Raimondo CEO REIV, 23rd April 2015