MARKET OVERVIEW

The Reserve Bank has left the cash rate unchanged at 2.50 per cent in May 2014 in line with general expectations. The Bank again reiterates the weak labour force conditions and lower wage growth which has eased pressure on inflation. With inflation remaining consistent with the 2-3 per cent band, the Bank intends for monetary policy to remain “accommodative” with a “period of stability in interest rates.” The overall housing market in April had a number of mixed indicators.

UNDER THE HAMMER

The Victorian auction market showed signs of cooler demand and transactions remained below-average. Despite this, house prices grew notably this month with a 2.5 per cent increase – the highest monthly increase since March 2010. The rental market remains more favourable than this time last year with the vacancy rate remaining stable at 2.8 per cent with solid rental growth for units and more limited growth for houses. The average clearance rate in April fell below 70 per cent to 68 per cent which is the lowest for the year to date. The number of auctions, however, remains higher than the 10-year average with nearly 3,000 auctions held in Victoria in April. The total number of transactions (auctions and private sales) is at a two-year high but remains below the 10-year average. There were an estimated 8,500 sales in Victoria during the month which is below the average of 9,400 sales for the month of April.

PRIVATE SALE

Victorian homes sold by private sale in April also took slightly longer to sell during the month with an increase of four days to 36 days. This increase could be partly due to the timing of Easter and Anzac Day weekends which limited the number of sales. Economic conditions remain relatively soft with the unemployment rate continuing to grow and consumer sentiment continuing to trend down. Wide-spread media coverage of a federal Budget with several cuts and potential increase in taxes is also likely to dampen consumer sentiment in the coming weeks.

PROPERTY MANAGEMENT

The vacancy rate in Victoria remains stable at 2.8 per cent in April 2014 and remains lower than 12 months ago. The declines in the inner suburbs were offset by increases in the middle suburbs this month. The rental market in the inner city has improved over the past few months with its vacancy rate now falling below the middle suburbs.

(*Commentary sourced from REIV.)

AUCTION CLEARANCE RESULTS

Sydney: 77%
Melbourne: 72%
Brisbane: 35%
Adelaide: 73%

(*Source APM)

Follow: Subscribe to this post's comments