The release of January data showed Melbourne property prices grew by 2.5% over the month, compared to a rise of just .05% in Sydney. It’s not the first time over the past year that Melbourne monthly growth has outstripped Sydney’s, but it is the first time in the current growth cycle that the annual data has shown the same result – Melbourne growth at 11% over the previous 12 months is now higher than its northern counterpart’s at just 10.5%.
Interestingly, Domain reported Melbourne returned its best auction result in five years over January, at the same time as Sydney experienced its worst month in ten years. With volumes in Melbourne growing steadily over the month, it’s expected to be a busy auction season heading into autumn.
Looking forward, media reports continue to be somewhat confusing – National Australia Bank cut their growth forecasts for 2016 late in January, predicting average capital city prices will increase by just 1% over the year. According to the bank, Melbourne is still set to outperform the average at 2%, but Louis Christopher, director or SQM Research says recent auction results show the market is still moving up at a faster pace. Christopher is standing by his prediction of between 8% and 13% growth in Melbourne prices over 2016.
Meanwhile, the Reserve Bank’s decision in early February to leave the official cash rate on hold at 2% was widely anticipated, although the accompanying statement leaves scope for further cuts later in the year. Conversely, analysts are predicting lenders could increase their loan rates outside of any official movements though, with wholesale funding costs now at their highest level in two years.
The current conditions present healthy opportunities for both buyers and sellers to transact, with optimism strong in the Melbourne property market. An early Easter break this year is likely to see higher than usual auction volumes in February, with high levels of demand positively impacting sales results.
