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The month in review: Regional Vic
By Herron Todd White
July, 2009
ECHUCA
Despite occupying only a relatively small proportion of the
real estate market in Echuca Moama, several investment
options are available to investors with $500,000 to invest
in the local market. The investment choice is likely to
depend on the motivation of the investor. The overall
level of sales activity is significantly up on where it was
12 months ago and this is largely affecting the lower and
medium segments of the market while levels of value
have held and/or improved over the same time period.
For those focussed on yields, it is still possible to pick
up a couple of well located basic older style dwellings
(basic 20-40yo 3 Bd/1-2bath dwellings in mostly original
condition) which are likely to show yields of up to 4.5-
5.5% with potential for capital growth. Time will tell
which direction this segment of the market takes once
the FHOG boost for existing dwellings is removed with
the grant reduction likely to be countered by a general
depletion of stock over the preceding 12 months. There
has been a noticeable shift away from the older unit/
serviced apartment sector of the market locally resulting
in an oversupply of property in the segment and minimal
capital growth potential.
Those prepared to take a longer term view and “put all
of their eggs in one basket” may find opportunities in
centrally located residential properties which are proven
performers over the longer term. Mixed results in the
rural residential sector indicate that there are still good
purchasing opportunities for modern dwellings on an
acre close to town for those happy to accept lower yields
in the short term and with a view to achieving higher
capital growth over the longer term.
MILDURA
$500,000 is approximately double the median house
price in the Mildura region.
The good news for buyers is that $500,000 will now buy
what would probably have cost closer to $600,000 at the
peak of the local market in late 2006. A recent example
is a 3.8 hectare lifestyle property with a 218m², 9 year old
brick veneer home and good external improvements
including an in-ground pool and extensive shedding.
This property recently sold for $505,000, however, would
have been expected to fetch $600,000 at the peak.
Despite improved sales activity in the sub $250,000
sector, we have not yet witnessed improved confidence
in the $250,000 - $500,000 section of the market. Possibly
the main sellers at the cheaper end have been investors
who are now “sitting on their hands”, rather than home
owners wishing to trade up. The impact of the First Home
Owners Grant has not extended to the dearer sector.
It would be fair to say that buyers of $500k properties
will in almost every case be owner occupiers, and these
buyers are showing continued caution.
This reluctance to commit at the dearer end of the
market appears justified, with the Mildura economy not
expected to improve until we see more secure irrigation
entitlements and improved confidence in the wine grape
industry. This will most likely take several years.
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