Melbourne Property Prices Set To Drop

According to tax reform lobby group Prosper Australia, Victoria has a property oversupply of about 70,000 homes. They have predicted that Australia will have a property crash with price drops of 30 percent across the state's capital.

David Collyer a spokesman for Prosper Australia has predicted that Melbourne will be the epicentre for price drops and foreclosures as we have an abundance of homes.

Melbourne can expect huge price drops in the newly built outer suburbs. According to the Australian Bureau of Statistics Victoria has built a new home for every 2.15 people over the last 15 years, while the occupancy rate per household stands at approximately 2.5 people.

Mr Collyer further suggested that Melbourne had built more homes than required, and had been doing this for a number of years.

Other experts disagree

John Edwards Residex's chief executive, who has been monitoring the countries property market for more than 20 years, has estimated that Victoria has 24,000 to many homes, but feels that we will avoid a price crash. He further stated that the majority of the homes were in the medium and high density developments, and that a significant part of these were in Melbourne.

Mr. Edwards felt that due to Australia's strong economy and low unemployment, and the absence of non recourse mortgages, would limit price drops here in Australia. He also felt that unless unemployment rose there would be no need for people living in Melbourne to sell their homes at a loss.

Hartley Dale Housing Industry Association chief economist felt that Melbourne's property market was the most at risk, and added that he felt that Prospers analysis was incorrect and that their predictions of a housing crash were unwarranted.

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Published on August 8-nd, 2011 in Home Loans
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.

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