Melbourne: Only capital city to double in median house value this decade, stays strong.

Melbourne has given home owners and investors the best results in the residential property market over the past decade as the only capital city where prices have actually doubled.



Melbourne also outshines Sydney's 10.5% annual growth over the last 12 months with an impressive 11%.

Melbourne's Auction Clearance Rate also proves to be resilient at the moment with 75% being the latest result. Sydney's market has been cooling, with a Clearance Rate of 65% posted from last weekend.

 

Not sure about the data set for the stats, but wouldn't the combined capital cities be 56.2%

 

Apart from Sydney & Melbourne markets it doesn't make for great reading especially when you factor in inflation as well.

Inflation By Year
Year Ann
2015 1.5%
2014 2.5%
2013 2.5%
2012 1.7%
2011 3.3%
2010 2.9%
2009 1.7%
2008 4.4%
2007 2.3%
2006 3.5%
Source Australia Historical Inflation Rate - 2006 to 2016.

I know past performance is not an indictor of future performance but to say moving forward that property doubles every 7/10 years could be a big stretch for most investors.
Understand that certain markets have outperformed these averages above but interested to hear if people think the new normal will be 12/15 years to double house prices

 

It may possibly be that Inflation is also going through a normal cyclical movement where it is currently in a Trough and may rise soon to go into a peak...

 

Inflation rate forecasts are projected using an autoregressive integrated moving average or ARIMA which are calibrated by analysts.

This is what the 10 year forecast looks like.


Source: Trading Economics / ABS

Inflation is expected to be at 2.20 this quarter, 2.90 by end of year and around 3.80 by 2020.

 

There must be more data than what's on the info-graphic, as you're right, the average of these value is 56.2%.

With that in mind their method, perhaps wasn't averaging the percentages above but rather that RP Data has taken the average median of all capitals from 10 years ago and then the average median from now and measured that separately. That could give a different result to the average of major city's growth. Makes more sense to measure it that way too.

Edit: Have attached the media release.

 

Weighted Median probably. Hobart would have very little influence on the overall median if it was calculated that way as opposed to just adding the 8 bar graphs and dividing by 8.

 

We could reference the article...

Property prices double every decade?

Inflation at 2.9% by the end of the year? The RBA would be over the moon. I think the Trading Economics ARIMA forecast is broken.

 

The article is attached for DL but thanks for linking!


2.9% does seem like a stretch! Although, it was at 3% in June last year.


Fingers crossed it stays low so there's some more CR reductions
Relevant: RBA flags rate cut if appropriate
Relevant: While above expectations, Australian core inflation remains soft

 

Heehawww go Melb!

 

Sorry Jake, I missed the article DL in your subsequent post.

We'll see further rate cuts (from the RBA) but I'm not sure it will help our property market. Further rate cuts will be in the face of low inflation, higher unemployment and stagnant wage growth. APRA/Basel capital requirements and the increasing cost of overseas funding would also mean that our banks will struggle to pass on these cuts to borrowers (while maintaining their huge profits and juicy dividends).

Look at the 10Y chart for Aussie bonds ... is this the rest of world betting against us?



And a trade deficit back to GFC levels...



Anyway, off topic again.

Go Melbourne.