Latest Melbourne Median Strong Tops $600,000!

M

meconium

Forget the gloom and doom; the Melbourne median is still very strong, according to the REIV. The latest figures are out and show an increase to $601,500 - a 6.9% rise over the last quarter of 2010.

The doom and gloom brigade will say that this is excessively high. Even if this is so, it means there is plenty of room for the lower end of the Melb market to rise.

Forget the extortionately overpriced innercity junk, I own a number of dual occ sites Beachside (Frankston, Seaford etc) - all ripe for redevelopment - and I'm chuffed.

Most or my houses are valued at $250,000 below the greater Melbourne median. A mispricing for sure. I expect more gains. The latest figures are very reassuring.

http://www.reiv.com.au/home/inside.asp?ID=1048&nav1=1226&nav2=165&nav3=1048
 
Yeah, yeah. 6.9% rise for the quarter. That's 27% annual rise. Buy now otherwise you will never get into the market!!
And the story is unbiased REIV I'm sure:rolleyes:

meconium, you should know how median prices work. With less sales volume, a few higher end sales can easily skew the median way higher.
It's not a sign of a booming market.
 
Agree with bluestorm. Quarterly medians should only be given a quick glance; they mean very little in a yearly snapshot, which is the time frame we should be looking at as investors.

Not suggesting it's going to be Armageddon or anything, however, I still see largely sideways (inflation tracking) markets in Melbourne for a while. It's had a good run.
 
agree -they're not accurate representations especially if you're going to be suburb specific.

As for inner city - last auction i went to still there was close to 60 ppl and 5 ppl bidding in south melbourne. as opposed to clayton where no one turned up to the auction.
 
the figures are different to these reported from residex.. not sure who's are more accurate:

The Age_property-values-fall-in-december

Melb Houses
Median Value _ December 2010 _ Year to December 2010
$593,500 _ -0.95% _ 9.21%

Melb Units
Median Value _ December 2010 _ Year to December 2010
$454,000 _ 0.36% _ 10.23%
 
re

Again, the measurement they use is 'median'. This figure can vary alot depending on the pool of figures they draw it from. The more important indicator would be how much your investment increase by rather than the overall median average.

Having said that, may be its true! Broadmeadows going to crack the million dollar mark in 7 to 10 years! :eek:

Warrenkh.2011
 
The main index providers give a reasonably accurate measure of the total market, residex house indices for calendar year 2010 show the following capital growth.

Melbourne 9.21%
Canberra 8.93%
Sydney 6.51%
Hobart 4.99%
Adelaide 3.13%
Perth 0.41%
Brisbane -2.90%
 
House prices will probably increase another 10% next year. There is very little reason to think otherwise. Boom in China will continue and increased wages will drive gains.
 
Andrew_A said:
The main index providers give a reasonably accurate measure of the total market, residex house indices for calendar year 2010 show the following capital growth.

Melbourne 9.21%
Canberra 8.93%
Sydney 6.51%
Hobart 4.99%
Adelaide 3.13%
Perth 0.41%
Brisbane -2.90%
Click to expand...

Would have most of this growth been attributable to the first few months of the year 2010???
 

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charlieandkath said:
Would have most of this growth been attributable to the first few months of the year 2010???
Click to expand...

Not at all. This figure is for the last 3 months of 2010 and suggests considerable strength.

To the doomsayers: I'm not saying the median is about to double anytime soon. What I suggest is that the market in general is stronger than most people think. Personally, I'm keenest on buying more stuff that is priced well below the median.
 
meconium said:
To the doomsayers: I'm not saying the median is about to double anytime soon. What I suggest is that the market in general is stronger than most people think.
Click to expand...

Well you keep believing that meconium. I'll consolidate, and pick up a few more in 2013, when more than a few people get burnt over the next 2yrs.

To me it's a sign of things are about to fall. My observation is that medians dip at the start of a boom, and peak at the end. That is, at the start all the lower end property are bought by investors and owner occupiers (eg, during baout 2009 with the FHOG increase). This causes a drop in medians initially. Then things propagate to the mid-range with upgraders, etc. By the time the median "jumps" 6.9% in the quarter like the Dec 2010, the figures are skewed with less low-end sales, and more high-end.
 
Median prices mean so little. I'd trust my instincts a lot more, which is that the stuff I'm looking at is sitting on the market not getting sold and eventually withdrawn
 
bluestorm said:
the figures are skewed with less low-end sales, and more high-end.
Click to expand...

And it is these low-end sales that will eventually yield the biggest capital gains. Anyone who pays $600,000 for the average Melbourne house and expects it to double anytime soon is stark raving mad. I'm looking for deals that are priced at barely half the current median.
 
Deltaberry said:
Median prices mean so little. I'd trust my instincts a lot more, which is that the stuff I'm looking at is sitting on the market not getting sold and eventually withdrawn
Click to expand...

There's nothing scientific about instinct. Anyone paying the current Melb median for property isn't going to see a massive capital gain soon. The smart money is buying stuff that is priced well below the median - it's these deals that will see significant capital gain, particularly if on blocks that can be redeveloped/subdivided.

zed_kid said:
All lies! Lies and statistics
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Yeah, the world's going to end - isn't that what the doom & gloom brigade told us during the GFC? Ignore the median at your peril.
 
Not sure if being below the median means it'll appreciate. Taking your logic, would a piece of land worth $3m (because it is an acre), in an area where most built properties are below the median, appreciate?
 
meconium said:
And it is these low-end sales that will eventually yield the biggest capital gains. Anyone who pays $600,000 for the average Melbourne house and expects it to double anytime soon is stark raving mad. I'm looking for deals that are priced at barely half the current median.
Click to expand...

I think you are missing the subtle difference between median movement and median skewing. Bluestorm makes a very good point in this regard, particularly the link to the varying stages of the cycle.

Buying at 50% of the median in the current market is relatively arbitrary as the median is currently skewed by disproportionate higher than real median sales. So in real terms, the real median may really be $500K (arbitrarily assumed figure) but since the sales volume in the lower end of the market has fizzled out, it is skewed. Median values are based on sale transactions over a certain limited period and do not account for all housing stock. Understanding the difference between true median (which you can never really be certain of) and skewed median, is an important cycle indicator.

The rationale of distance from the median will give you a different value depending on the property cycle, due to the median skewing; low at the start and high at the end. Rather than focus on that, I prefer to look for "undervalued" property, which can be below, at or above the median, because this is "latent CG" waiting to be realized.

my 2 cents
 
And now for some counter balance...an excerpt of Money Matter's retort:

Yep, house prices in Sydney and Melbourne are considerably more expensive than other major cities. And, whereas prices-to-income ratios in other major cities have largely stabilised, in Sydney and Melbourne the ratios have gotten much worse.
But how does that gel when we claim house prices have already started to fall?
It’s simple. Right now, many sellers falsely believe house prices will recover. So they’re holding on… for dear life. They’re still in a dreamland thinking they’ll get the same price that sellers were getting two or three years ago.
But soon enough they’ll start to sell, and those figures will filter through to the dodgy house price indices. And eventually the numbers will even start to show in the Demographia survey.
That’s when sellers will figure out the glory days have gone. And that’s when you’ll get the rush to the exit. Especially when the fabled baby-boomers start flooding the market with their un-mortgaged properties.
What do they care whether they sell for $600,000 or $500,000 when they bought the house for $50,000 thirty years ago? OK, they will care, because it’ll be a big chunk out of their retirement savings. But the point is, once they get it that house prices don’t always go up, they’ll sell as soon as you can blink.
But, The Age article did get one thing right:
“Australian house prices are expected to finish this year flat, amid signs that a slowdown in price gains could become ‘entrenched’, according to ANZ.”
The bit they got right is the ‘entrenched’ part… not the house prices finishing flat this year. House prices will finish the year lower. There’s no doubt about that.
What will become entrenched is the realisation that house prices don’t always go up. Investors and buyers have already started to figure that one out. And the longer prices stay where they are, the more convinced buyers will be that there’s no rush to tuck into the market.
That’s happened in the UK and US where property buyers no longer see housing as a get-rich-quick money-making goldmine.
 
If my property rises by 5% in agreed value over the course of 2011, I will be popping a big fat bottle of champers on NYE :)

And my property is valued just under everyone's median priced property in Melbourne :)
 
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