First of all let me apologise for not posting over the last couple of months. For the same reasons purchasers have been taking longer when buying property, the team at Nyko Property has been working harder than ever to qualify and assess the right type of property for this market.
Over the last 12 months, some economists in the main stream media where saying there would be a 20% reduction in the median price in Melbourne. I actually don’t disagree with that notion entirely. I think some locations needed a correction as they did not have the fundamentals to support the growth in prices. Since last year we have seen a reduction in the median price in Melbourne of about 6%. A far cry from the 20% quoted…. or is it.
If you take into account the ‘average’ capital growth per annum of 7%, which has not occurred over the last 2 years (14% in total), along with that 6% reduction in the median price, well there we have it… a REAL correction of approx 20% in the median price. I think that is as far as it will go, but unlike the all knowing economists, I realise that is just my opinion and the market is a wild animal that cannot be predicted. Rates went down today and although it should not be the reason purchasers re-enter the market, the activity around our office shows they already have been and will now start coming back into the market a little faster.
Now you will see that I use the word median and average above quite a lot, that’s because even in the worst market conditions that have occurred in the last 10 years, there were areas and properties that showed substantial growth. In July 2010 Nyko Property sold a project name Ascot Cup, a boutique 31 apartment development in Ascot Vale. It was a great project, priced correctly (at valuation of course), with large internal areas and low body corporates. It was also in a part of Ascot Vale that neighbours Moonee Ponds, where prices are 10%+ higher.
Ascot Cup is coming up to settlement and the banks have had the valuers through to value the apartments. The median price has reduced 6% across Victoria in that time and valuers are currently being very conservative. Does this mean that the valuations came in low? The quick answer is no. Most were valued at contract price, which was a win in itself, while a handful of others were valued in at $20-35k over purchaser price! These investors have just had a 5-7% increase in their property value and they haven’t even settled yet.
The average and the median prices you read about are just that, a culmination of all prices in a certain area, of all property types, all clumped together. Not an accurate way to assess a property or an area.
If you have any questions or would like to find out more about our service, call Nyko Property on 1300 720 315, email us at email@example.com or check out our website www.nykoproperty.com.au
Bill Nikolouzakis – Nyko Property