The Reserve Bank of Australia decided to leave interest rates on hold at 4.5% in June as they observe the impact that recent rate rises are having on the Australian economy. This is particularly important as Europe tries to deal with its sovereign debt issues. The RBA is paying most attention to the health of the global economy and how it may impact Australia.
For the year to March 2010, the Australian economy showed solid growth, expanding by 2.7%. This is significant when compared to the small 0.7% growth in the previous year. Economists predict a positive outlook with growth forecast to be around 3.5% for the coming year.
Property clearance rates in Melbourne have certainly eased in the past few months from the mid to high 80’s to 65% at present. Stock levels are at a record high for the time of the year. Despite this, our Street News subscribers have indicated that property sales and prices are still strong and that buyer levels at opens are still very good.
Leading industry forecaster, BIS Shrapnel, predicts a modest growth in the Melbourne market over the next three years. “Price performance will be patchy, although we expect the overall shortage of dwellings will prevent a fall in the median house price. On the other hand, price growth will remain very limited due to the rising interest rate pressuring affordability.
Our forecast is for Melbourne’s median house price to rise by a total of 11 per cent over the three year period to June 2013, or a modest 3.5 per cent per annum”.
By Peter Sarmas, Managing Director, Street News