Auctions still strong as Melbourne records higher prices

The property market has delivered another week of positive results, especially in Melbourne where auction clearance rates lifted higher once again to 70%.

Victoria was also given some good news when the Real Estate Industry of Victoria released price data for the first quarter of the year, saying the state showed its biggest improvement in more than 10 years.

The median house price in Melbourne rose 5.1% to $561,500 during the quarter, according to the REIV. The index, which was seasonally adjusted, showed annual growth of 4.65%.

There were fears last year the property market in Melbourne would remain flat.

REIV chief executive Enzo Raimondo said in a statement the higher prices reflected factors such as population growth, consumer confidence and lower interest rates.

However, some have questioned whether the result reflects an accurate picture of the Melbourne market.

SQM Research managing director Louis Christopher says the numbers use a seasonally adjusted approach, which could overstate the price increase. He says other price comparison services tend to shun the seasonally adjusted approach.

“I think if it wasn’t for the seasonally adjusted approach, they would have recorded a negative result for the quarter,” he says.

REIV spokesman Robert Larocca told SmartCompany the seasonally adjusted measure was used as it gives a “better expression of the market’s direction”.

He points to the REIV website, where other data has been posted online. “We provide all three versions of the data, and think the seasonally adjusted gives an accurate view,” he says.

Nevertheless, Christopher says he agrees a recovery is occurring in Melbourne.

“I think there’s a tentative recovery happening,” he says. “I’m convinced when the ABS comes out with their own house price data Melbourne won’t show the type of recovery seen in the REIV data, but a recovery is taking place.”

The REIV figures also show the city recorded a clearance rate of 70% this week, based on 511 auctions, with Raimondo saying the results were a “further indication of the healthy state of the market”.

Australian Property Monitors recorded a 73% rate for Sydney, compared to 67% last week and 54% during the same weekend last year.