This is weekend signifies the end of major auction activity for the year and with it the end of what has been a volatile year for the residential property market. Throughout the year a number of trends have emerged that look set to continue in 2009.
The REIV’s forecast for 2009 is that homes valued between $350,000 - $500,000 will attract strong demand and achieve moderate capital growth.
Properties that fall into this bracket are predominately located in the south-east, east and north-east between 10 and 20 km from the CBD. This price bracket also encompasses properties located in the western suburbs between 5km and 20km from the CBD.
Throughout 2008 the western suburbs has seen capital growth at a time when the much of Melbourne has experienced softer market conditions.
We expect the sub-$500,000 market will be driven by the substantial interest rate cuts and increases in the first home buyers’ grant. The impact of these economic stimuli has not been apparent in the last few months due to caution among buyers, however the REIV’s outlook is for demand to increase after Christmas and New Year when buyers have adjusted their expectations to take account of the assistance and lower rates.
Changing market conditions are providing opportunities for astute buyers in the inner east and bay side suburbs. For instance, in Kew the median dropped by 19.2 per cent in the September quarter. In Balwyn the median has dropped 7.9 per cent over the last 12 months. This is allowing buyers with high levels of liquidity to purchase blue chip property at prices not seen in some instances since mid-2006.
