Domain - Melbourne's median price up by 5.4% in 2009-10 and by 8.2% in 2010-11

Foot in door amid price window

Author: Natalie Craig
Date: October 15, 2008
Publication: The Age (subscribe)

Stagnant Melbourne house prices and increased Government hand-outs could give first home buyers a long-awaited window of opportunity.

Melbourne's median house price should grow by 2% to about $460,000 in the 2008-09 financial year, according to an annual forecast by property researcher BIS Shrapnel.

That compares with an 8.7% increase in the median house price in the last financial year to $451,000. Almost all of that growth occurred in the last six months of 2007.

Analyst Angie Zigomanis said while interest rate cuts and increased first home buyers' grants were intended to stimulate demand for housing, the global financial crisis had made prospective buyers cautious about their future income and employment prospects, and consequently their ability to repay a loan.

Mr Zigomanis said because first home buyers were such a small percentage of the market, they would not influence demand enough to push prices up, and stood to take advantage of buying opportunities.

"I think in the next year or so, slower growth will give them an opportunity to shop around without prices moving beyond their reach," he said.

The BIS Shrapnel/PMI Australian Property Outlook predicted lower interest rates and the return of investors to the market would start to push Melbourne's median price up by 5.4% in 2009-10 and by 8.2% in 2010-11.

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