Melbourne property hits all time low

Published: October 22, 2008 - 08:02 PM

By Lesley Coombes

Melbourne’s property market took a battering last week, suffering its worst day in four years, The Age reported.

Despite Kevin Rudd’s recent increase of the first home buyers grant, clearance rates for last Saturday had collapsed by 6%.

Enzo Raimondo, Chief Executive of Real Estate Institute of Victoria said in response to the collapse in clearance rates, “It’s a very volatile time and we need to get used to seeing fluctuations in the clearance rate while this kind of broader economic uncertainty and heightened level of fear about the future continues.”

Rudd’s $10.4 billion economic security package announced last week will double the first home buyers grant to $14,000 for existing homes and triple the grant to $21,000 for newly constructed homes.

Director of Hocking Stuart, Scott McElroy said “They only got the bonus a few days ago. The extra $7000 doesn’t make buying a home any less of a major investment, so people are going to take their time.”

The sale of houses in the south-east and north-east of Melbourne took a beating last week with the south-east suffering a 15% drop in sales while the north-east was down 9% . Considering the recent global financial crisis, this downturn in property sales is yet another worry for the economy.

Rudd’s economic security strategy of increasing the home buyers grant is undoubtedly an effort to stimulate the economy by encouraging spending in the housing sector.

Victorian home buyers or those considering entering the property market must carefully compare what is on offer. With the banks likely to tighten their lending criteria, it will become more difficult for households to find affordable mortgages as competition in the banking industry decreases.

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