I happened to read an interesting and informative article in Bloomberg titled Melbourne Hasn't Seen Worst of Housing Drop As Glut Builds by Nichola Saminather and thought I share it with you guys.
Below are some of the points mentioned in the article above:
Home prices inflated more than 100% between 2002 and 2010 but has been heading south since then.
It seems that Melbourne property prices have fallen the most compared to other cities in Australia (for year end June 2012 - Australia financial year end).
Population growth slowed for three (3) consecutive years (2009 to 2011).
Melbourne city homes relative to income are the most unaffordable after Hong Kong, Vancouver and Sydney.
Melbourne population is 4.1million.
More than 240,000 home in Victoria are unoccupied and about 90,000 of them are in Melbourne alone!
Once again, to read the article in Bloomberg, Melbourne Hasn't Seen Worst of Housing Drop As Glut Builds by Nichola Saminather, click here.
The good news is Melbourne was once again ranked this year as the most livable city on planet earth.
And here are my comments and thoughts on Melbourne property prices.
1. Besides the increasing cost of materials for construction, the surge home prices experienced in Melbourne and many cities in Australia and including Singapore was because of money flowing into these cities from Mainland China prior to 2011. However, China economy has not been expanding at the rate it was years ago.
2. The racial attacks (especially on the Indian community) in Melbourne may have also contributed to the lower growth rate in population of Melbourne. I have heard from friends where there Indian friends have moved out of Melbourne to other cities in Australia. Google to read more on racial attacks in Melbourne.
3. New apartments in Melbourne, Sydney and Perth are costly because the Australia government allows foreigner to purchase them for investment; thus, creating an artificial demand.
4. I cannot understand how can the local council allow developers to build highrise apartment blocks in Melbourne city but not requiring them to provide a car park to each unit.
5. Overseas investors may not realize they cannot sell the unit to non Australia residents. As such, the market for second hand homes is smaller than new homes. For overseas investors, having a car park may not be essential; but I guess most locals would want a car park. Therefore, second hand apartments without a car park become less attractive to locals and thus are under pressure to be sold at a lower price and this would also bring down the price of those with a car park.
6. And if you read the local Melbourne news recently, there are people being retrench every now and then in Melbourne and some companies are even closing down their factory/office in Melbourne. Therefore, I am sure most are being cautious and just having a wait and see attitude before purchasing a property in Melbourne.