Melbourne’s housing market performed well in the final quarter of last year, with the median house price of $669,000 up five per cent on the September quarter.
The growth in house prices over the year shows what an excellent investment property is: at the end of 2014 Melbourne house prices were up 11.7 per cent on 2013.
Inner Melbourne increased by 11.7 per cent for the year with middle Melbourne up by 13.2 per cent and outer Melbourne at 8.9 per cent. Melbourne’s record-breaking auction boom, with more than 40,000 auctions in 2014, helped push house prices up.
Prices rose considerably in many suburbs in the December quarter, with prices in 20 suburbs up more than 10 per cent.
Kew, with a median house price of $2,035,000, was the city’s top growth suburb, up 18.2 per cent on September. It was followed by Carlton North at 17.4 per cent, Dromana, at 16.5 per cent and Northcote at 16.4 per cent.
More suburbs join million dollar club
Four Melbourne suburbs joined the million dollar club for the first time ever in the final three months of 2014 – Richmond, Northcote, Strathmore and Flinders all had median prices of more than $1 million for the first time.
As well, East Melbourne, Carlton North, Clifton Hill and Aberfeldie were back on the list of 59 Melbourne suburbs with million-dollar-plus median house prices – a total of eight additions to the list.
Some of these suburbs new to the million-dollar club were benefiting from “the ripple effect” with buyers priced out of neighbouring suburbs – for example, Northcote, due to the flow-on effect from Fitzroy North.
Richmond’s median price was $1,071,000, up 12.1 per cent. Northcote’s price was $1,065,000, up 16.4 per cent. Strathmore’s median of $1,026,000 was up 8 per cent on September, while Flinders’ median of $2,070,000 was based on fewer than 30 sales.
Toorak was again Melbourne’s most expensive suburb with a median house price of $2,850,000. Second was Deepdene was $2,250,000, followed by Canterbury with $2,201,000.
Regional house prices also bounce back
With many buyers looking to regional Victoria for more affordable homes, the regional market also rebounded. The December quarter median house price in regional Victoria was $344,000, up 5.5 per cent on September. The median unit and apartment price rose four per cent to $257,000.
Over the year ending December 31 the regional median house price was up 5.8 per cent. The year-on-year increase for units and apartments was three per cent, with this market showing a healthy four per cent increase over the December quarter to a median unit price of $257,000. That’s good news for investors, whom agents say are increasingly interested in regional Victorian markets.
Looking back to the previous year and to 2012 illustrates the increasing strength of this regional market: in the December quarter 2013 the median house price was $320,500 – a new record then – and the year before that it was just $302,000.
Of course there are variations across the state as local factors such as seasonal demand, employment levels and transport links to Melbourne and key regional centres affect property prices. The medians ranged from 25 per cent in Benalla and 25.1 per cent in Colac-Otway to small falls in some areas such as the City of La Trobe.
In Greater Ballarat, the increase was 4.1 per cent, in Greater Bendigo 4.5 per cent and in Greater Geelong there was a slight fall – 0.5 per cent.
In many of the towns and suburbs within these municipalities there were fewer than 50 sales over the year. The median house price is still an important indicator, but is based on less data than in Melbourne suburbs with significantly more sales.
The overall median house price increase was good news for sellers and homeowners. Over the year agents reported increased buyer competition for properties in centres within commuting distance of Melbourne or key regional towns as rising Melbourne prices led families to seek more affordable properties. Improved rail links have also boosted demand.
What’s next in 2015?
Interest rates remain at an historic low and in the lead up to the autumn buying season the market remains solid.
However, much depends on future macro economic factors such as the unemployment rate, consumer and business sentiment, and the role these play in determining whether the market continues to perform solidly beyond throughout 2015.
This story was brought to you using data and other information from The New Daily‘s real estate content partner, realestateVIEW.com.au