THE beefed up first home buyers grant has propped up the lower end of Victoria’s housing market, the biennial 2010 Municipal Revaluation report found.
The report conducted by the Municipal Group of Valuers, a discussion group of the Australian Property Institute, is used by Victorian local councils and the state government to determine how much rates/taxes are collected for their budget.
In the first quarter of 2010, over 2.5 million properties were revalued which is up by 100,000 compared to 2008. The market value of assets including residential, commercial, industrial and rural rose by 14% to $1.26 trillion.
The Valuer-General Victoria Robert Marsh said the highest increase was a 20% increase in residential properties over the two year period from $813 billion to $976 billion, followed by industrial properties at 15% to $58 billion and a much more modest change of 7% in commercial to $136 billion, and 6% in rural properties.
Marsh also noted that the number of residential properties revalued also rose 14% to 2.21 million houses, whereas the pool of commercial assets revalued declined by 12.6% to around 152,000. Rural property values rose 6% to $87 billion across 156,000 assets.
API Victorian president Steve Simpson said the residential areas showing growth are predominately areas where house prices are less than $500,000 that would have benefited from the government’s first home buyers grant.
The residential market has shown the greatest growth, in particular the outer suburbs have shown substantially more growth than the inner regions where the affordability of properties is greater.
The report found the global financial crisis impacted on house prices in Metro Melbourne which declined in the second half of 2008 with the bottom of the cycle reached in the first quarter 2009.
And by the second and third quarter in 2009, prices were rising jumping by over 12% on the previous quarter and in the outer suburbs by more than 20% which reflects the number of first home buyers in the outer northern and eastern regions of Melbourne increasing more than the inner suburbs. In the inner eastern suburbs, growth was in the modest 5% to 10% bracket.
Valuers at the revaluation launch asked whether the first home buyers grant boost had made housing affordability worst in the outer suburbs by pushing up house prices and in some cases, developers simply adding the value of the grant on their products.
API head of inner city/metro valuation committee Greg Stevens said the grant had definitely contributed to the price growth but he stopped short at declaring that it had worsened affordability.
GFC – for metro Melbourne – median house price as follows:
2nd Qrt 2008 – $399,000
3rd Qrt 2008 – $385,000
4th Qrt 2008 – $385,000
1st Qrt 2009 – $375,000
2nd Qrt 2009 – $400,500
3rd Qrt 2009 – $425,000
4th Qrt 2009 – $480,000
1st Qrt 2010 – $460,000
2nd Qrt 2010 – $460,000 (*Partial result and not official result)
Meanwhile Marsh said the wind back of the first home buyers grant and six interest rate increases by the Reserve Bank since October last year is beginning to have an impact house prices.
He added that the effects of the consecutive interest rate rises appear to be softening the residential house price in 2010 with the median stabilising around $460,000 in early 2010, a decrease of around 4% on the previous quarter.
Australian Property Journal
