Small price fall signals return to normal conditions

Mr Raimondo, CEO, REIV said: "The small price reduction is further evidence that the residential property market has returned to more sustainable growth patterns of pre-1999, and entered a new property cycle. We believe price growth and activity levels have bottomed out and, given the current economic environment, we are likely to see a period of stable or minor growth in the foreseeable future after three consecutive quarters of negative growth.

"Whilst the number of transactions is up to 50 per cent down on the same period last year, in some metropolitan and regional areas, stock levels are likely to increase over the next six months," he said.

Mr Raimondo added: "Suburbs performing strongly in the quarter include Kew, Brighton, Brunswick and Croydon, typical of established properties within close proximity to the city.

"The Melbourne apartment market recorded a median price of $290,000, a fall of 0.7 per cent from $292,000 in the June quarter. Despite a reduction in investor activity, the continuing demand from owner occupiers confirms an ongoing cultural shift to the lifestyle of inner-city apartment living."

Growth in Victoria’s major regional centres also slowed in the September quarter as investor demand weakened, with growth constrained by lower stock levels.

Ballarat’s median price fell 1.6 per cent over the quarter to $190,000, 3.1 per cent below the median of $196,000 recorded this time last year. Bendigo fell by 2.9 per cent over the quarter to record a median of $203,000, down from $212,000 this time last year. Geelong followed this same trend, down 2.5 per cent over the quarter to $275,000, but up 5.4 per cent compared to the median of $261,000 recorded this time last year.

Melbourne’s most affordable suburbs (in order) are St Albans, Meadow Heights, Hoppers Crossing, Sunbury, Frankston, Roxburgh Park, Mooroolbark, Berwick, Croydon and Glenroy. Melbourne’s most expensive suburbs (in order) are Toorak, Brighton, Kew, Malvern, Camberwell, Brighton East, Hawthorn, South Yarra, Glen Iris and Balwyn North.

Regional Victoria’s vacancy rate decreased to 2.3 per cent, a 0.6 per cent fall from the June quarter 2004, slightly above the 2.2 per cent vacancy rate recorded in the September quarter last year.

The newly completed and previously untenanted inner-city apartment market (CBD, Docklands, St Kilda Rd and Southbank) vacancy rates fell to 6.5 per cent, down 0.5 per cent from the June quarter, well below the 7.2 per cent recorded in the September quarter last year.

The residential vacancy rate for apartments not newly completed and previously tenanted in inner Melbourne (0-4km from the CBD) rose slightly over the quarter to 4.2 per cent. Inner Melbourne (4-10km from the CBD) recorded a vacancy rate of 4.2 per cent also up slightly, with Middle Melbourne (10-20km from the CBD) falling slightly to 3.7 per cent. Outer Melbourne (20km plus from the CBD) recorded the same vacancy rate as June at a low 2.7 per cent.

Enzo Raimondo, CEO, REIV said: "Following the trend this year, there was minimal movement in vacancy rates throughout most of Melbourne even with lower levels of new stock on the market as demand and supply levels are relatively balanced.

"Regional vacancy rates remain very low due to strong rental demand and a decrease in new stock levels as investor demand weakens. The low rates reflect a healthy, balanced property market sitting below the 3 per cent mark," he said. Geelong’s vacancy rate fell 0.2 per cent to 2.6 per cent, Bendigo’s rose 0.1 per cent to 1.6 per cent, while Ballarat’s rose 0.1 per cent to 2.2 per cent, during the September quarter.

Vacancy rates for other Victorian regions again remain very low for the September quarter, with Wodonga (2.0 per cent), Wimmera (3.6 per cent), Shepparton/Goulburn (2.3 per cent), East Gippsland/Wellington Shire (2.8 per cent), Warrnambool/Western District (1.6 per cent), Latrobe Valley/South/West Gippsland (3.3 per cent), and Mildura/Mallee (1.6 per cent) respectively.