By Robert Larocca

Melbourne housing market blog

The key differences between the past two property cycles and the current one has become much clearer following Monday’s release of the RP Data-Rismark Home Value Indices results for May.

The May results showed that the value of a house dropped by 3.6 per cent in May resulting in a rise of only 1.6 per cent over 2014. Unit values also fell by 2.6 per cent over the year following; a drop of 3.4 per cent in the month.

After a new nominal peak in Melbourne house values was reached in March, there has been two consecutive months in which values have fallen ensuring buyers in winter and early spring wont face rapid price rises. In fact, they are likely to see houses valued lower than they were in real terms in 2010. This result should also eliminate any concerns that the local market was locked into a cycle of unstainable growth in prices.

This upswing phase in house values started in May two years ago and is clearly more moderate than the 2007 and 2010 cycles due to better alignment between supply and population growth along with the fact that consumers remain cautious. Over the past two years, house values in Melbourne have risen by 13.1 per cent and are now only 0.7 per cent higher than the October 2010 peak.

Robert Larocca
RP Data Victoria Housing Market Specialist

Source: RPD

Follow: Subscribe to this post's comments