Here are the medians for Melbourne houses for the first 5 months of the year (source: Residex), Jan 539,000, Feb 547,500, March 562,500, April 580,500, May 582,000. As you can see Melbourne was still making leaps and bounds for the first 4 months, but May it stopped almost dead in it's tracks. I would suggest for the month of June we will either see a slight decline or another "stagnant" month. Reality is that Melbourne is likely at the peak of a very strong cycle of growth. We are likely in for a correction in prices and years of stagnation. Anyone expecting strong capital growth in Melbourne in the near term is not looking at the underlying data (IMHO).
We should have seen the stagnation/correction start in 2008, however an extra deposit boost for FHBs and changes to the foreign ownership rules pushed housing into a speculative mania in which already overpriced housing rose to even more extraordinary levels.
I agree with your comment about Spring, this will be a real test not only for the Melbourne market, but Australia wide. If auction stock is anything to go by we have a lot more supply on the market than the same time last year. I have been following the REIV statistics quite closely and for the last 3-4 months Melbourne has had approximately double the stock being auctioned as last year. Take note of some recent posts by user demographics:
http://www.somersoft.com/forums/member.php?u=18475
I would pay not so much attention to the lack of sales data he is quoting (which may be incomplete), but checkout the number of new listings that are hitting the market in the areas he is profiling. In my opinion we are seeing and will continue to see a flood of property hit the market over the next several months and prices could take a severe hit if sellers start leapfrogging eachother to the downside like buyers do to eachother on the upside.
Some may say this sounds extreme, however we have had potential for a huge problem manufactured with free deposit money and historically low record rates only 12 months ago. I made note of the fact earlier this year that there was a huge increase in the number of intro interest rates taken up during early 2009:
http://www.somersoft.com/forums/showpost.php?p=640262&postcount=33
This is when some financiers were offering 12 month intro periods with interest rates as low as 3-4%, if these buyers have not factored in the expense of an interest rate rise to 7%+ then how many months will they struggle on before they end up with a forced sale?
I believe we have 6 months worth of falling lending growth (still rising, albeit at slower pace), 3 months trend in falling clearance rates for Melbourne auctions, what are the conclusions you are drawing from these trends, given the RBAs position that lending growth, clearance rates & capital growth are all correlated in normal conditions?
Hmm I don't believe this correlates with the data I have collected and observed (May has the higher volume, both in real terms and averaged over all weekends, even with the June long weekend removed), see attached for some interesting stats/trends...we have clearance rates falling, volume fell last weekend to the lowest since Feb, average price at auction also fell to Feb lows...looking bleak, very bleak.
