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Melbourne Property Market Update - January

January Melbourne Property Market Update

The property market is likely to benefit from a forecasted interest rate cut in the first quarter of 2015 in addition to falling unemployment rates and petrol prices since late 2014.

According to Bill Evans, Westpac’s top economist, interest rates should be cut again in both February and March by the Reserve Bank, dropping them to a new record low of 2%.

The widely forecast drop to interest rates are likely to be accompanied by a continuing downward trend in unemployment. These forecasts, along with six-year low petrol prices has resulted in an upward swing to consumer confidence levels according to the Westpac/Melbourne Institute index of consumer sentiment, a positive trend for those looking to buy.

The uptick was likely driven by news that Australia's unemployment rate fell to 6.1 per cent in December, while petrol prices fell to a six-year low, Mr Evans said.

CommSec chief economist Craig James has said that housing market activity is solid which is supported by comments from HIA chief economist Harley Dale indicating that unit sales are at their highest level in more the nine years.

"Sales of multi-units surged in both October and November to reach their highest level since September 2003," HIA chief economist Harley Dale.

A report from CoreLogic, ABS also notes an increase in sales with unit approval figures hitting 8,841 in November, 17.2% higher than the previous month.  

"The key leading indicator measures of building approvals and new home sales suggest this re-concentration of growth in the multi-unit segment will persist into 2015," observed Harley Dale.

This is good news for sellers. With interest rate drops, steady employment and drops in petrol prices, affordability for buyers in the market is higher than in recent times. An increase in building approvals typically reflects the increase in demand from the market, suggesting for those looking to sell that now is a good time to do so.