The Reserve Bank (RBA) has been full of surprises this year. After an unexpected cut in February and the lack of a widely anticipated cut in March, markets were pricing in a 75% chance of a rate cut in April. But the RBA chose instead to once again leave rates on hold at the historic low of 2.25%. As could be expected, speculation was rife straight afterwards that the next cut will come in May, with no obvious end to the current easing cycle yet in sight.
Regardless, the low interest rate environment is continuing to drive a high level of buyer demand in the property market, with the latest RP Data/Core Logic report showing Melbourne prices grew by 0.6% in March. Cumulative growth over the quarter is now at 3.5%, with the year-on-year increase at 5.6%. Melbourne’s prices have risen by 23.6% in the current growth phase, which began in June 2012.
Interestingly, March also brought an unseasonable decrease in the total number of properties for sale according to a recent SQM Research report. While listing numbers grew in all other capital cities except Canberra, Melbourne’s total availability of properties for sale fell by 1.4% last month. Now down 14.7% compared to March last year, it’s the biggest decrease in stock for any capital city and suggests that locally, there are now more buyers than sellers. Director Louis Christopher said while Melbourne was previously a mixed market, the latest data suggest a much more uniform recovery. Christopher recently revised his September 2014 predictions and says his “scenario two” forecasts describing Melbourne price growth of between 7-13% in 2015 are now likely.
The current shortage of available properties is leading to heavy competition amongst buyers in particular areas and price segments. While buyers need no encouragement to act, sellers who have been considering a sale this year would be well advised to review their options soon, in order to take advantage of market dynamics.
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