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Melbourne Prices Catch Up to Sydney’s, Even as Auction Sales Drop Off - 3 August 2010

Despite the overall fall of housing prices in Australia recently, Melbourne has outperformed many markets over the last year, according to experts.

The average price of a home in Melbourne rose 25 percent from March of last year to the same time in 2010—one of the greatest swells in property values across the globe.

In recent years, Melbourne has become a real estate force to be reckoned with, as an increasing number of people have bought homes in the city’s suburbs, according to real estate economists. Sydney, the highest-price investment city in Australia, was hit harder than Melbourne when the real estate bubble started to burst in 2004, and for three years, values dropped by 6 percent there, causing the gap between the two cities’ median home prices to narrow.

Prior to 2004, a median-priced home in Melbourne was 60 to 70 percent of that of Sydney’s. But as of March of this year, Melbourne’s median is $522,000, about 94 percent of Sydney’s $558,000.

Housing auctions have become quite popular in the two cities. About 57,500 properties were auctioned across Australia’s capitals in 2009, making up more than 18 percent of overall sales in the capital cities.

However, auction sales have dropped off slightly this summer, going from 80 percent sold this April in Melbourne to 65 percent sold in July. In the nation overall, property prices also fell by 0.7 percent in the June quarter, marking the first time in more than 17 months that values have dropped. Experts say that this isn’t the start of a larger downturn, however, but instead a reflection of interest rate hikes.

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