You may recall that I often say, there is not one property market but many micro markets that behave in quite different ways. But at the capital city level, Melbourne appears to be in some strife in terms of price falls at the moment.
Overall, it certainly looks like the combined impact of state policy, higher interest rates, and also bad planning decisions, combined with significant interstate migration away from Melbourne, which is offsetting still too high net overseas migration, is translating into property weakness. That said, of course property still remains over expensive relative to income to a stupid amount, while the restriction of international studies this year will weaken demand for rental property, so while the currently rental growth is still 7.8% over the part year according to CoreLogic, it may well begin to weaken ahead, putting more pressure on property investors in the area.
It does indeed look like for now Melbourne is a property problem child, but it also to me highlights the exposure that Perth has given the risks to mining demand from a weaker China. And as the RBA minutes reinforced yesterday, its not likely we will see rate cuts anytime soon.
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