Melbourne Property Still Leads the Pack

Post last month’s unexpected interest rate cut, the majority of commentators including three of the major four banks had predicted another cut would follow this month. But true to form, the Reserve Bank (RBA) again surprised the market by instead leaving the official cash rate on hold at 2.25%.

The expert predictions had largely been based on a rash of weak economic data, including low wages growth and declining confidence levels. Regardless, the property market continues to defy the performance of the broader economy, with the February rate cut spurring a new flood of buyer activity.

During the final weekend of a record-breaking February, the Melbourne market was tested in one of the biggest auction days of the year. From a listed 1539 auctions, RP Data reported a high clearance rate of 76.5%, showing an increase in supply has been eagerly absorbed by willing buyers.

Meanwhile, the latest CoreLogic RP Data index has shown Melbourne prices continued to climb last month, rising 0.2% after a 2.7% increase in January. Values are now up 4.5% over the quarter, with Melbourne showing the strongest quarterly growth of any capital city.

Analyst Richard Wakelin said Melbourne is now in its third year of recovery, following a two and a half year downswing that finished in September 2012. Far from being at the end of the current cycle though, Wakelin believes the current upswing may continue for another four quarters or more, underpinned by a fundamental strong demand that he says outstrips supply over the long term.

With rates expected to remain low for some time, buyers need no encouragement currently. For property owners who’ve been considering a sale, autumn offers an excellent opportunity to transact in an environment of strong buyer competition.