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Strong first six months

PPG_Blog_July_image 2_market update

The Reserve Bank left the cash rate unchanged at 2.5 per cent in July 2014 as was expected. The statements from the Reserve Bank reiterated that a ‘strong expansion’ in housing construction is now underway with dwelling prices increasing, although at a slower pace in recent months. With inflation remaining within the target range, interest rates are likely to remain low and unchanged for some time.

House price growth continued in June although there was a notable decrease in the number of sales and listings as the market heads towards the slower winter period. There was also a fall in the REIV Property Market Sentiment Index (PMSI) although members remained more optimistic than pessimistic about the overall market.

Demand remained solid in the auction market with an average clearance rate of 71 per cent, marking the third consecutive month of improving clearance rates. Auction numbers also remain above average in comparison to the 10-year average of 2,366 auctions. The first half of the year produced a record number of auctions with a grand total of more than 18,000 which comfortably surpassed the previous record of 16,070 auctions held in the first half of 2010.

Despite the high auction numbers, total sales (auctions and private sales) in June are about 10 per cent lower than this time last year with an estimated 8,300 sales in Victoria. In addition, the number of sale listings has also been decreasing gradually since mid-May. Over the past six months, the total number of sales is estimated to be at the same level as last year with about 51,700 sales in Victoria.

In the private sale market, the median number of days has increased by

one day to 38 days in June 2014 for Melbourne and is on par with this

time last year.

Information provided courtesy of the REIV July Research Bulletin

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