While interest rates have increased in May, the Melbourne property market is also on the rise with auction results, rental prices and sales listing all increasing the past month.
The RBA increased the official cash rate by 25 basis points on May 2 bringing it to 3.85 per cent, making it the highest for more than a decade.
While the increase is expected to impact household budgets, housing prices aren’t expected to be impacted due to a range of other factors supporting the market.
CoreLogic research director Tim Lawless said their data revealed prices in the four major capital cities experienced a second consecutive monthly rise in national housing values.
“The lift in interest rates could act to dampen some of the recent housing exuberance, although a range of other factors are likely to support the continued stabilisation in home values including low available supply, extremely tight rental conditions and higher demand via net overseas migration,” Mr Lawless said.
“Time will tell whether the latest rate hike is enough to send the recent positive trend in home values into reverse, however our anticipation is the market will continue to level out on the expectation that interest rates have peaked and the imbalance between housing demand and supply will persist for some time yet.”
This demand can be seen with Melbourne’s auction results leading the way with the highest number of sales by auction across the country.
Melbourne’s auction clearance rate for the last week of April was the highest of all capital cities at 77.7 per cent.
This was seven per cent higher than Sydney which has the next best clearance rate.
It was also 8.5 per cent above the average of all capital cities which sits at 69.2 per cent.
The city also had the most auctions with 729 total compared to 570 in Sydney, 201 in Brisbane and only 152 in Adelaide.
Of those 729 auctions, 474 properties were sold.
Of those 114 sold before auction, 354 sold at auction and six sold after auction.
If you’re in the market to buy, now is a great time with 397 new sale listings placed on the market in the past 30 days according to CoreLogic data.
For sellers the slower rate of sale shouldn’t worry sellers with low supply, a competitive employment market and immigration expected to keep prices steady.
This has been shown for April with housing prices remaining steady with a modest increase of 0.1 per cent for Melbourne.
A sharp increase in rental prices for Melbourne could also see more investors interested in purchasing.
CoreLogic data reveals Melbourne had the strongest rental appreciation for April up by 1.4 per cent. Rent has risen by 5 per cent in the past three months and 15.2 per cent over the year.
With a rental average now sitting at $535 per week Melbourne lost its title as Australia’s most affordable rental capital to Adelaide.
The increase was driven by demand for units and this demand is expected to remain due to lack of supply.
“Medium to high density dwelling approvals have mostly held below average since 2018, setting the scene for a chronic undersupply across the medium to high density sector a few years from now,” Mr Lawless said.
This projection could make units a good option for investors looking to get into the market or expand their portfolios.
While interest rates have increased again the impact of that on household budgets and housing prices isn’t expected to impact housing prices in the immediate future.
Additionally, with prices remaining steady for property value and demand increasing for units buying and selling across Melbourne is still in a strong position.
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