Real Estate in Australia in Melbourne Update

How has the latest interest rate rise affected the residential and commercial real estate markets in Melbourne in Australia?

While the rest of Australia reels back in relative horror at the recent interest rate increases, the property market in Melbourne is remaining steady according to all the latest report findings and statistics.

This is our real estate in Australia in Melbourne update covering the residential and the commercial property markets in what is currently one of the strongest micro sectors in Australia’s overall real estate marketplace.

A recent article in The Age newspaper highlighted the fact that property prices in Melbourne are relatively cheap for Australians living in locations such as Sydney and Perth and that there are now companies flying in buyers and investors from these super expensive cities and locales to view what Melbourne has on offer.

These external buyers are fuelling demand in a city where demand is already intense and where affordability is just about managing to keep up with the upward trend in real estate prices.

There was a concern that the recent interest rate rise would have a sudden and dramatic cooling effect on the successful real estate market in Melbourne – but if the auction statistics and figures that have been released in the interim are anything to go by, the rate rise has not dampened the flames of the property price and demand fire at all.  According to the Real Estate Institute of Victoria, 85% of all properties up for auction last weekend were sold.

Naturally interest rates take a time to bite – but there is additional strong data and direct evidence to suggest that real estate in Australia in Melbourne is standing up to be a strong economic sector.

For one thing, the commercial property market in Melbourne is enjoying booming times.  Vacancy rates are at record lows especially for stock in the CBD – and because additional expansive projects are not due online until the end of 2008 and 2009 and companies are relocating to or expanding within Melbourne, these tight vacancy rates are likely to remain the norm.

For those with commercial assets this is naturally good news – and for those considering the residential property market in Melbourne it also feeds down to this sector as well.  AXA and ANZ are both taking up greater office space and expanding operations – i.e., unemployment levels in Melbourne are low and new job opportunities are giving the buying market confidence to commit to property in Melbourne.

The one factor that has to be kept a close eye on is affordability in Melbourne, and according to the very latest HIA/Commonwealth Bank Housing Affordability Index this has dropped quite significantly of late.  Those most affected are buying or have bought in popular Melbourne suburbs in the lower to mid range housing bracket and this is where demand is also intense and supply restricted.  This is resulting in even greater price pressure which ongoing is an issue that needs to be addressed.