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Autumn Market Promise

By Anqi Wang

The Reserve Bank’s (RBA) decision to leave the official cash rate on hold at 2% this month had been widely expected amongst the experts. Rates have now been stable since May last year and although financial markets are pricing in an 84% chance of a cut in 2016, 60% of experts surveyed by researcher Finder.com.au believe there will be no change.

Meanwhile in the property market, price growth slowed to its lowest level in 31 months last month, according to the latest figures from RP Data. Melbourne’s median dwelling price fell by 0.6% in March, although annualised growth is at a healthy 9.8%. Melbourne is now the strongest capital city, with Sydney’s annual growth at 7.4%. AMP chief economist Shane Oliver told Domain Melbourne has only come off the boil slightly, with much of the cooling due to a price softening in units caused by oversupply – detached house prices grew by 10.7% over the last 12 months, while unit price growth was at just 2.5%.

On the auction front, clearance rates have remained strong, with volumes rebounding after the Easter weekend. During the last weekend of March, CoreLogic RP Data recorded a Melbourne clearance rate of 68%, slightly lower than the 71.4% recorded the week before.

The speculation over a possible house bubble continued throughout last month, with The Economist the latest to suggest Australian house prices are overvalued. According to their report, a study of house prices versus rents and incomes of global cities has shown our house prices are inflated by 40%. But the Financial Review said despite house growth clearly slowing, there are no indicators to suggest values are about to crash or even suffer a sharp decline.

Interestingly, a Domain article said property price records have been smashed across Melbourne this year, from prestige suburbs through to traditionally blue collar areas. Scarcity is said to be the driver behind premium prices being achieved at all different price points, with vendors having shown reluctance to list their properties for sale during a period that’s been broken up with multiple public holidays.

This landscape of strong demand is presenting good opportunities for homeowners who may have been considering a sale. Conditions are promising for a healthy autumn property market with continuing strong demand.

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