“There are three reasons to be confident about prospects for the market in 2013: consumer confidence levels are above this time last year; the clearance rate is higher than this time last year; and overall prices have been stable,” said Enzo Raimondo, REIV CEO.
“Affordability is at reasonable levels with prices remaining below their peak and interest rates at historical lows.”
Mr Raimondo identified Melbourne’s inner city as likely to yield the “best bargains” with the median 10.4 per cent below its peak. This compares to a 9.3 per cent drop in the city’s middle suburbs and 7.9 per cent in the outer suburbs.
“Regional Victorian prices have been much more stable,” he continued. “In Geelong, the median is 1.8 per cent below peak; in Ballarat, it is 2.1 per cent below; and in Bendigo, prices are only slightly (0.1 per cent) below peak.
“If consumer confidence continues to slowly improve, it should encourage more buyers into the market and that will drive capital growth. As supply and demand is in much greater balance, any capital growth in 2013 will only be moderate.
“First home buyers have clearly responded to lower prices and interest rates with around 18 per cent more than in 2011. With stamp duty cuts increasing to 30 per cent on 1 January, conditions will continue to improve for them,” Mr Raimondo concluded.
The REIV also released property sales data for 2012, which revealed there were 69,000 residential sales in Melbourne, with 23 per cent by auction. This compared to 72,000 in 2011 with 24 per cent by auction.
For Victoria, there were 90,000 residential sales compared to 96,000 in 2011.
The auction clearance rate reached 61 per cent in 2012 compared to 59 per cent in 2011, with the highest clearance rates recorded in Donvale (82 per cent), Hughesdale (82 per cent), Heidelberg (80 per cent) and Kew East (80 per cent). The largest volume of auctions was again in Richmond with 455 and a clearance rate of 67 per cent.
Melbourne and Frankston had the highest number of residential sales for the second year in a row, while substantial increases in sales were recorded in Pakenham and Croydon.