Melbourne's median house price to reach $1 million by mid-2018: Domain's Dr Wilson
Melbourne could join Sydney sooner in the million-dollar median house price club, with Domain chief economist Dr Andrew Wilson saying it could happen by the middle of 2018 instead of the December quarter he spoke of just two weeks back.
Melbourne's median house price was more than $795,000 in December 2016, according to the Domain group.
Record migration levels and the recent moves by the Victorian government to waive off stamp duty on homes up to $600,000 will drive the price growth, said Dr Wilson.
"I believe the Melbourne median house price would exceed a million dollars by the middle of next year," he said on 2GB’s Nights with Steve Price show, revising his forecast of a $1 million by the December quarter of 2018 he spoke just a few weeks earlier carried in an article in Domain.com.au.
Sydney’s median house price surpassed $1 million in July 2015 after 8.4 per cent growth in a single quarter.
Dr Wilson expects Melbourne’s price growth to average 3 per cent a quarter for the next year and a half, which would push the median house price beyond $1 million "sooner rather than later".
Dr Wilson said “a change in the tax mix it can have a sharp short-term impact on the market” such as the recent announcement by the Andrews Labor government that from July 1, there would be no stamp duty for first home buyers for purchases below $600,000.
Those buying a home valued between $600,000 and $750,000 will be eligible for a concession.
First-home buyers purchasing cheaper properties would likely “activate” upgraders in the market, who would then spend more for their next property, pushing up prices, Dr Wilson said.
He cited the rapid price rises from 2009 to 2010 as a result of sops to first-home buyers. During this time, thousands of dollars in incentives were provided to first-home buyers to buy into the market.
Dr Wilson also cited the near-record levels of migration into Melbourne as a key driver of prices on a 2GB’s Nights with Steve Price show.
He said net migration into Victoria was about 83,000 for the 12 months to September 2016, according to ABS data. Much of that was into Melbourne and “that’s what pushing rents up and prices up in the Melbourne market”.
Low interest rates were also part of the equation and it “has left the market cherry ripe for an absolute rush of buyers”, he said.
