It is clear that 2012 is ending with the market in a better position than it was a year ago, and improved levels of affordability are ensuring that buyers continue to be well placed in2013.
There are three reasons to be confident about prospects for the market in 2013: consumer confidence levels are above this time last year; the clearance rate is higher than this time last year; and overall prices have been stable.
Affordability is at reasonable levels with prices remaining below their peak and interest rates at historical lows.
The inner city is where buyers will find the best bargains in 2013 as the median is 10.4 per cent below its peak compared to 9.3 per cent in the middle suburbs and 7.9 per cent in the outer suburbs.
Regional Victorian prices have been much more stable. In Geelong, the median is 1.8 per cent below peak; in Ballarat, it is 2.1 per cent below; and in Bendigo, prices are only slightly (0.1 per cent) below peak.
If consumer confidence continues to slowly improve it should encourage more buyers into the market and that will drive capital growth. As supply and demand is in much greater balance, any capital growth in 2013 will only be moderate.
First home buyers have clearly responded to lower prices and interest rates with around 18 per cent more than in 2011. With stamp duty cuts increasing to 30 per cent on 1 January, conditions will continue to improve for them.
Key statistics for 2012 Victorian Property Market
- 69,000 residential sales in Melbourne with 23 per cent by auction compared to 72,000 in 2011 with 24 per cent by auction.
- More active first home buyers with an estimated 29,000 compared to 24,600 in 2011.
- 90,000 residential sales in Victoria compared to 96,000 in 2011.
- Auction clearance rate of 61 per cent compared to 59 per cent in 2011.
- Melbourne and Frankston had the highest number of residential sales for the second year in a row. Substantial increases in sales were recorded in Pakenham and Croydon.
- The highest clearance rates were recorded in Donvale (82%), Hughesdale (82%), Heidelberg (80%) and Kew East (80%).
- The largest volume of auctions was again in Richmond with 455 and a clearance rate of 67 per cent. Reservoir was second with 419 auctions and a clearance rate of 52% and St Kilda third with 362 auctions and a clearance of 57 per cent.
- There has been $11B in auction sales in 2012 compared to $13.7B in 2011.