The month in review: Regional Vic
By Herron Todd White
December, 2009
ECHUCA
Echuca Moama’s residential market showed significant
improvement throughout 2009, relative to the 2008
calendar year on the back of record low interest rates,
the federal boost to the First Home Owners Grant (FHOG)
along with an improvement in confidence levels across
most sectors of the economy.
Resales of several properties (minimal works between
sales) in the local area indicate that levels of value have
recovered to be at least equal, if not slightly ahead of
where they were when the market peaked in late 2007
as shown below:
1. Crossen St, Echuca - Under Contract - subject to
confirmation
| Initial Sale Price |
Date of Sale |
Recent Sale Price |
Date of Sale |
Change |
| $255,000 |
25/07/2007 |
$283,000 |
30/09/2009 |
10.98% |
2. Crossen St, Echuca
| Initial Sale Price |
Date of Sale |
Recent Sale Price |
Date of Sale |
Change |
| $228,500 |
11/04/2007 |
$238,000 |
01/02/2009 |
4.16% |
3. Pakenham St, Echuca
| Initial Sale Price |
Date of Sale |
Recent Sale Price |
Date of Sale |
Change |
| $235,000 |
15/03/2008 |
$263,500 |
15/03/2009 |
12.13% |
4. Unit Sutton St Echuca - Under Contract - subject to
confirmation
| Initial Sale Price |
Date of Sale |
Recent Sale Price |
Date of Sale |
Change |
| $245,000 |
19/03/2008 |
$250,000 |
02/11/2009 |
2.04% |
5. Rivergums Dve, Moama
| Initial Sale Price |
Date of Sale |
Recent Sale Price |
Date of Sale |
Change |
| $520,000 |
13/07/2007 |
$530,000 |
18/05/2009 |
1.92% |
The recovery has also manifested itself by way of shorter
selling periods, and the lower segment of the market
has without doubt been the greatest beneficiary of the
FHOG boost, where the grant makes up a proportionately
larger part of the overall sale price. This activity spilt
into the next segment of the market, ($250-$350K) with a significant increase in sales activity, and once again
relatively short marketing periods were required in order
to attract buyers for these properties.
Despite the strength in the larger towns, it should be
noted that several of the smaller satellite towns have
struggled under the dry environmental conditions, and
declining terms of trade for the agricultural sector, which
is a key driver for these smaller economies.
Most now wait with baited breath to see how much of an
impact the reduction of the federal boost and predicted
interest rate rises may have on the market after a relatively
buoyant period, which has been artificially stimulated by
the government.
MILDURA
As 2008 drew to a close, we all became over familiar
with the TLA (Three Letter Acronym). Weaker economic
conditions became the GFC, and we could just as easily
have added OWR (Ongoing Water Restrictions) and a
WGO (Wine Grape Oversupply) into our local vernacular.
The TLA created uncertainty in the Mildura residential
market, and led us to forecast ongoing weak buyer
sentiment along with either static or falling values.
Twelve months on, the sky has not fallen in, and in fact
we have seen the emergence of the first LGS (Little Green
Shoots) in our local market. In the first half of 2009, the
combination of attractive First Home Buyer Grants and
low interest rates brought a flurry of activity into the entry
level market, and brought a smile to our local builders.
While home construction activity has again eased, we
have in recent months seen increased demand for homes
in the up to $400,000 bracket. The recent relaxation of
water restrictions, from Stage Three to Stage One, has
also created a greater sense of optimism about living in
the Mildura region.
Another development that had a big impact on the
local residential market was the surprise decision by
the Victorian Planning Minister to prevent construction
of dwellings on lots less than 40 hectares in size in the
Farming zone surrounding Mildura. This has created a
great deal of uncertainty and has negatively affected the
value of the many small horticultural holdings, which
surround Mildura. While there may be some willingness
to review this decision, the upshot would appear to be
that there will be fewer houses built within this zone. An
eventual winner from this decision may be developers
of rural residential subdivisions in existing low density
residential zones (LDRZ), however we have not witnessed
this to date.
Twelve townhouse lots overlooking the water in the
Dockside Mildura Marina project have been committed in
the past fortnight, after the developer reduced the asking
price from $300,000 to $200,000, a bargain basement
price.
Stay tuned for what 2010 brings.
GIPPSLAND
Following depressed market conditions during the last
quarter of 2008, the start of 2009 saw increased buyer
confidence and a commensurate resurgence in residential
sales activity. The low interest rate environment and
the State Government ‘First Home Owners Grant’ and
subsequent Federal Government ‘First Home Owners
Grant’ provided the stimulus for increased sales of existing
homes in the lower price range and construction of new
homes.
The regional Gippsland Cities have also experienced
increases in land prices, with vacant allotment prices
steadily increasing as supply decreased in line with
the increased construction new homes. There are
also a number of new residential subdivisions under
construction, with a scarcity of available land at present.
The mid market has also increased due to the activity
in the lower end of the market, and a low interest rate
environment, together with the lack available land to
construct a new home and increased construction costs.
The prestige end of the market remained static over 2009,
in line with the previous year.
SWAN HILL
Analysis of the residential property market in Swan Hill
and other small townships in north western Victoria over
the last twelve months indicate that conditions have
been relatively stable, although, towards the end of
October there was a significant increase in the volume
of sales, particularly for houses under the $250,000 price
threshold, which was largely a result of the grants available
under the Governments First Home Owners Scheme.
This generated strong interest for the construction of
new houses under the $250,000 price threshold and for
established houses in Swan Hill and the smaller rural
centres under the $150,000 price threshold.
With the low interest rates, we expected the market to
be quite stable with small increases in value in some
areas, but while we had expected the volume of property
transactions to increase towards the end of October when
the government was reducing the amount of money
available under the First Home Owners Scheme, we did
not expect the increase in the number of sales that did
occur.
The two recent interest rate rises have probably
dampened the market to some degree, but provided
there are no significant rate rises in the next six months,
We would expect there to be a steady volume of sales and
that values should remain quite stable.
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