By Herron Todd White
May 2019

Geelong Property Updates

Geelong currently has a number of large englobo developments with land for sale. Although there are concerns about the market slowing, with longer days on the market, increased stock levels and changes in lending policy in the wake of the Royal Commission into banking, there are still good opportunities in the current climate. Land developments such as Armstrong Creek, Charlemont; Mt Duneed, Torquay; Lara; Curlewis, Clifton Springs/ Drysdale; Highton; and Ocean Grove are still proving popular with first home buyers. Within these locations, developers are purposely selling 350 square metres blocks where purchasers can build a 20-square house on the land for $430,000.

Buyers need to weigh up the costs of building a brand new house within a developing area for a similar cost of a renovator in an existing suburb. It appears to be popular with approximately 30 to 40 per cent of the sales within these developments being purchased by first home buyers.

However, is purchasing land within a developing estate the best decision given all the recent market doom and gloom? Typically, land within these locations doesn’t have as high capital return due to the oversupply levels. On the other hand, established residential areas often have a higher entry point of value, therefore affecting affordability. However, often it’s the established areas that tend to have a higher return on value due to the fact that a modern dwelling is constructed within a location closer to established infrastructure.

With those things in mind, affordability will be the decision maker at the end of the day.

Cost of construction is an important factor that needs to be considered when selecting an allotment. Typical building rates within the Geelong region vary from $1,200 to $1,500 per square metre for a standard volume build and increase to $2,000 to $5,000 per square metre for custom designs. This large variation in price is due to a number of variables from site topography, planning requirements, soil conditions, shape and size of the site, client selections, inclusions and builder’s margin.

Within larger, developing estates, typical building rates are lower than established residential areas often due to the straight forward nature of the build. Established areas have extra costs associated with unforeseen events, for example issues with access for equipment to and from site, noise, clean up, fencing as well as the surrounding neighbours to contend with.

Although the Geelong market has cooled, we are still seeing construction values stacking up against comparable properties sold, however this may not be the case moving forward. Currently, there are signs in the west for areas such as Melton, Rockbank and Aintree where cost of construction and land are not falling into line with surrounding sales. If this is the case then purchasers may need to be do their due diligence to ensure that what they intend to purchase and build reflects the surrounding market or their affordability.

Speak with a Geelong Mortgage Broker today.

Mildura Property Updates

Mildura’s expansion is constrained by the Murray River on one side, resulting in most of the new subdivisions over the past ten years being located to the south and south-west of the CBD and now reaching Sixteenth Street.

Recent subdivisions have sold out quite quickly, with lots of between 600 and 750 square metres selling in a range between $120,000 and $135,000, equivalent to between $180 and $200 per square metre. Land values have risen steadily over the past five years, meaning that re-sales have generally resulted in a profit.

It’s expected that future subdivisions will include some smaller lots below 500 square metres, as well as lots containing between 600 and 700 square metres. This will help achieve average sale prices above $200 per square metre to offset the increased cost of service connection.

There are also subdivisions occurring in the satellite towns of Irymple, Red Cliffs and Gol Gol, within seven and 16 kilometres of Mildura’s CBD respectively. These subdivisions tend to contain larger average lot sizes, giving a cost of below $200 per square metre, however serviced lots in these locations still cost usually over $100,000 and up to $150,000.

The cost of building new homes (including ancillary components) in the Mildura region is generally in the range between $1,700 and $2,200 per square metre of living area, depending on the size of the dwelling, extent of ancillary improvements and standard of fit out. Most new homes tend to contain living areas of between 165 and 240 square metres and usually include double garages and verandahs or outdoor living areas. Construction costs tend to be at least $250,000, ranging up to $450,000 for larger dwellings with good finish.

Over the past few years, most new homes have been built by owner-occupiers intending to spend between $425,000 and $525,000 on land and construction. Few of these new homes have been put to the market, however a recent example of a re-sale is 10 Toorak Drive, Irymple, which sold in mid 2018 for $507,500 and comprises a 907 square metre lot improved with a recently completed, four-bedroom dwelling with good external improvements.

The current strength in the Mildura market means that we are seeing the value of most newly finished properties being in line with the cost of the land and the build. Investors have built a number of homes in locations with cheaper land costs in parts of Red Cliffs and Mildura, however the majority of new home construction in recent times has been undertaken by owner-occupiers. The rental market remains tight, however in recent times investors have concentrated on buying older, established homes, which provide slightly higher gross returns.

Shepparton Property Updates

Shepparton (including Kialla, Shepparton North and Mooroopna) has some 18 residential estates on offer with blocks ranging from 350 to over 2,000 square metres. Some blocks are snapped up for under $80,000 which seems to be appealing to investors in estates where investment style housing is the norm. Land in the majority of estates is priced around the $140,000 mark with the likes of the Kialla Lakes and Seven Creeks estates to the south and The Vines estate in the north. These blocks are offering around 800 to 900 square metres of land which are appealing to the majority of the owneroccupier market.

Building rates appear to have risen slightly over the past twelve months. Some volume builders are offering a basic style plan with basic finishes for around the $1,000 per square metre of living, with a majority of the building contracts in the area priced at $1,250 per square meter. This includes ducted heating and cooling, 900 millimetre appliances, 2,550 millimetre ceiling heights, an alfresco area, stone bench tops and better quality flooring. The private builder market starts at around the $1,200 per square metre mark and only goes up from there depending on the builder and the quality of home being built.

There is no shortage of building companies in the area and construction in the Shepparton area has been very strong for an extended period. In recent times, we have had additional companies enter the market to carve out a slice of the action.

Estates such as Kialla Lakes, Sanctuary Park and the Boulevard are seeing some resistance with values when the total house and land cost is nearing $500,000, as a number of the display homes have sold in the $500,000 to $550,000 bracket. Estates with larger blocks such as Riviera Park in Kialla as well as Grammar Park in Shepparton North have good demand due to the quality of the homes offered and the boon of a larger than average block.

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DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.