The extraordinary boom and recent deflation in Melbourne dwelling values

I was speaking with Chris Vedelago about what has been happening to Melbourne house prices, and re-ran some of the numbers using RP Data-Rismark's new daily hedonic index series. And the results frankly blew my mind. They are summarised in the chart below. In short, Melbourne dwelling prices rose by 35% between January 2009 and December 2010. That is an extraordinary gain in capital values. They've come back about 9% since that time. Yet 5.1% of that 9% pull-back has come in 2012, and 80% of the 5% decline in 2012 has come since the 15th of April. Remember the months of May through August are all seasonally weak, although this does not change the directional moves. Another interesting point here is that Melbourne rental yields are lower than most other cities. In contrast to Sydney, where house prices have been rising again since mid May (missed by the media as they don't have access to the intra-month daily data), Melbourne has yet to respond to the RBA's double rate cut...(NB: net figures in chart below updated thanks to a sharp reader picking up that they were not truly net--the new numbers are a few percent lower.)