Industry Focus

On the whole, Melbourne is balanced in terms of supply and demand, says Raimondo, but he acknowledges there are areas that are in slight oversupply or undersupply. Cooney says demand will continue to be related and proportional to confidence. "Confidence is a general term but we find our market changes with either business mood or people's confidence. Prior to the last election and over the past couple of years, there wasn't a lot of confidence in the economy or where we were heading, so there was an attitude of 'wait and see what happens.'" However, he anticipates a steady turnover in 2014, saying it will be "a more buoyant year". OUTLOOK "On a scale of one to 10, I think we're probably going to head towards seven or eight," Cooney says. "There'll be some turnover. There'll be some traction. There'll be limited growth. I think we're heading to more inflationary growth while we try to maintain our values rather than the expectation of great rises. I don't see that a property you buy today will be 15 per cent more at the end of the year." There will be a little more focus on rental returns, Cooney adds, saying people will come back into play rather than buy purely for capital growth. "You can put the real estate market into different categories. The easiest and safest turnover is residential housing when it's owner-occupied, then there are "On a scale of one to 10, [2014 is] probably going to head towards seven or eight. There'll be some turnover. There'll be some traction." investments and new apartments. The new apartments are completely different." Raimondo says 2013 was the first year of recovery and there could be another two years of moderate sales growth based on historical trends. He says the performance of the Victorian market in the long term depends on demand-and- supply factors. "There are several factors that would drive demand for property in Victoria: strong population growth, relatively more affordable living costs and Melbourne's reputation as the most livable city in the world. There are also a number of downward risks that could limit house price growth, including weak labour force conditions, the loss of major car manufacturers and fragile consumer sentiment," he notes. "But key to all of this is sentiment. The property market is more sensitive to changes in sentiment than changes in other macro-economic conditions that can take some time to take effect." Real Estate Services • Issue 3 11

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