Buyers' market as Melbourne house prices fall 2.7 per cent in...

Buyers' market as Melbourne house prices fall 2.7 per cent in May

Karina Barrymore
From:Herald Sun
June 01, 2012 11:27AM

MELBOURNE home prices plunged a further 2.7 per cent in May as buyers continue to drive hard bargains.

According to the latest RP Data home value index, Melbourne residential property prices have now fallen 4.6 per cent in the past three months and a staggering 8.4 per cent during the past year, with the latest median price of just $490,000.

Melbourne was the worst performer in the country during May. Nationally, prices fell 1.4 per cent across all capital city homes.

"It is clear that the market is becoming increasingly price point driven,'' RPData analyst Tim Lawless said.

The market for units is holding up better than for detached houses, Mr Lawless said.

More:Median home price tracker

"Much of the weakness is confined to the detached housing market rather than apartments,'' he said.

"Unit values have been much more resilient to value falls compared to houses.''

Nationally unit prices increased one per cent during May while houses fell 1.8 per cent.

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In Melbourne unit prices were down 1.4 per cent, compared with a 2.8 per cent drop for houses.

A positive aspect of the price falls is that homes are becoming more affordable, research company Rismark managing director Ben Skilbeck said.

More:Home loan repayments calculator

"The combination of interest rate reductions, declining home values and disposable income growth has significantly improved affordability,'' Mr Skilbeck said.

"Since dwelling values peak in November 2010 they are down by 7.6 per cent, the Reserve Bank of Australia cash rate has fallen from 4.75 per cent to 3.75 per cent and disposable income per household has increased by over 5 per cent.''