An extreme shortage of available listings has made this the fastest-moving market of recent years. There is strong competition in the luxury market combined with scarcity. As real estate becomes more scarce in prime areas of our city, it become more and more desirable, and expensive.
Demand is high at all price points in and around a 10km radius of Melbourne. Inventory is low and we are seeing more bidding wars and higher prices per square meter than ever before. Auction clearance rates are over 90% in some inner Melbourne suburbs, that’s 9 out of 10 property’s selling at auction.
Another reason why bidding wars are erupting is due to the rising trend of Chinese investment. The impact of Chinese investment in Australia residential property has become increasingly recognised. You might be thinking why Victoria? Investors are spotting value in Melbourne real estate in comparison to big brother city Sydney. The median house price in Sydney tipped over $1M last year where Melbourne is hovering around $750K.
Population growth is another contributing factor of rising real estate investment. Over the past 12 months, Melbourne has recorded the fastest rate of population growth at 2.1%. Elsewhere, the annual rates of population growth have been recorded at 1.7% in Sydney, 1.6% in Brisbane, 0.9% in Adelaide, 1.6% in Perth, 0.8% in Hobart, 1.9% in Darwin and 1.4% in Canberra.
Mark Ribarsky is the Director of Wise Real EstateAdvice, a buyers agency that services inner Melbourne suggests ‘the real estate market is experiencing a stage in an up and down cycle.’ Property cycles usually run in "seven year cycles" hence is often referred to by property market commentators and refers to the swing in house prices through the phases of boom, bust, bottoming and recovery. Overall, price gains are likely to be constrained and over the long term, given that house price-to-income ratios and debt levels are very high and given we have just seen a period of very strong gains.