Written by Herald Sun Sunday, 28 February 2010 10:49
MELBOURNE'S property market has smashed through the $1 billion mark for the first time.
The barrier was broken during a record weekend for auction prices combined with soaring prices achieved for private sales during the week.
And experts predict there is no end in sight with property prices headed even higher, even on the back of interest rate rises.
Enzo Raimondo, chief executive of the Real Estate Institute of Victoria, said price and not the number of properties on the market was driving our $1 billion-a-week boom town.
"We have never reached a billion-dollar figure in a week, especially coming off a very quite period," he said.
"The significance is that if it starts off like this it could be an indication the residential property market in Melbourne probably will be the same as in 2007 when we had some double-digit price growth."
There were close to 900 auctions with an 86 per cent clearance rate at the weekend, and 713 private sales in the past week.
"It's a moderate number of properties and it's not the highest auction weekend for numbers. It's purely price that has driven this billion-dollar figure," Mr Raimondo said.
Experts say that even the prospect of the Reserve Bank raising interest rates tomorrow, and further rises through the year, cannot dent the buying frenzy.
Tim Fletcher, of Fletchers Real Estate, said the firm sold 13 of their 14 properties that went to auction and every one went for 10-20 per cent above the reserve the vendor set on the day.
"In areas like Balwyn and North Balwyn a million bucks doesn't buy you very much at all now," Mr Fletcher said.
"If you had said that five years ago you'd have been laughed out of town. Those same houses would have been $400,000 or $500,000."
Mr Fletcher said it was possible that the median price of a home in Melbourne would hit $650,000 in a few months and $1 million within six years.
"We have too many buyers chasing too few properties, and unless something drastic is done about urban consolidation and freeing up more land on the fringes it's only going to get worse," he said.
Catherine Cashmore of JPP Buyers Advocates said the $1 billion boom was causing despair among buyers trying to get into the market.
"I have never come across such high anxiety in buyers. It's playing on buyers' minds because they are only seeing the property boom and they despair that they'll never be able to afford a home."
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