It’s been quite some time since our last post. A little too long actually. It’s hard to believe yet another year is behind us and 2015 has arrived.
Despite all the news regarding economic uncertainties (whether perceived or otherwise), Melbourne’s property market has continued to tick along quite nicely, and proof of this is in the actual results. Above is a graph we have established, utilising a couple of sources to track what we call the ‘primary indicators’ (median sales price and volume) over time for residential property in Melbourne.
Although median prices have been a little up and down over the last 12 months, the growth trend has continued upwards. Some sources are saying we are nearly 10% up on this time last year with seasonally adjusted figures, with raw median prices up 4.3%. This is supported by a relatively steady volume compared with 2013 (i.e. average approximately 9000 sales/mon for 2014 v 8500 sales/mon for 2013).
So what is install for Melbourne’s Property Development Market this year?
We have seen some mixed messages in the media, including some suggesting another ‘bust’ due to the uncertainty surrounding the economy, the end of the mining boom and unemployment rates. However, this same uncertainty existed during 2014, yet the property market remained solid. So why shouldn’t the same continue if all else stays the same?
We have more recently seen a drop in petrol prices, the Australian dollar and the wider share market, but is this necessarily bad news or in fact the opposite?
This recent article from The Age provides some food for thought.
Mining Boom End – accounting for less than 9% of economic output and only 2% of the total workforce, could the benefits of the mining boom over the previous decade be over-exaggerated?
Lower Australian Dollar – did the high Australian dollar in fact damage manufacturing, tourism, and other service exporters, and impact on local producers competing with imports, which suddenly became much cheaper? It seems as though we are starting to see the reverse, including some real potential that our unemployment rate could turn around with this ‘re-balancing of the economy’.
The positive impact on household savings – there is no question that the steep drop in oil prices should reduce household expenditure, and the view that we are now a little more moderate in our consumption and spending, and more attentive to savings and investment for the future compared with the last decade has some merit. I’m happy to put my hand up on this one.
And if all this activity makes room for further interest rate cuts, better still.
Yes some companies will be worse off, but with household expenditure representing about 60 per cent of the economy, more money saved may just improve confidence, investment and growth in property further compared to what we saw in 2014.
It certainly appears this way for us at Landeq, on both existing client projects and new opportunities.
Our 3 unit townhouse re-development project in Airport West is now complete, and we are also excited to announce a few new projects in our portfolio, including a 2 unit re-development in South Yarra, a 25 Hectare (350 lot) land development project in Mernda, as well as a 15 Hectare (200 lot) land development project in the new Plumpton precinct.
We are looking forward to 2015 being an exciting year for us, for our clients and the property industry alike.