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CoreLogic NSW housing Update April 2018
CoreLogic QLD housing Update April 2018
CoreLogic SA housing Update April 2018
CoreLogic VIC housing Update April 2018
CoreLogic WA housing Update April 2018
Regional VIC April 2018
The month in review: Regional VIC
By Herron Todd White
One of the key drivers which underpin demand for local residential property has to be the tree change phenomenon in Echuca and Moama given their proximity to Melbourne. Local agents report that these buyers generally put a floor in the market with some estimating they might account for as much as 40% of enquiries. This enquiry level is considered a strong barometer or lead indicator for local property markets. Melbourne buyers typically participate in the $500,000 plus price bracket and are particularly attracted to riverfront properties in excess of $1 million. For mortgage belt property, local employment is considered to be one of the key drivers and this is heavily linked to the agricultural output of the local region given the related manufacturing businesses in town.
Ballarat is a city in transition – a teenager of sorts, moving from a relatively sleepy and sedate regional centre to a vibrant educational, commercial and cultural hub that is rapidly becoming a satellite city of Melbourne.
The demand for residential property, at its quintessence, is derived from the population. People need a place to call home. More people generate more demand for what is effectively, at any point in time, a commodity with a fixed supply.
The population of Ballarat in 2008 was approximately 80,000. It is now approximately 110,000.
With this in mind, if the population doesn’t have a shekel to its name, its capacity to drive demand and in turn drive a market is limited.
So, that said, what brings people to Ballarat? Employment. The employment market in Ballarat is strong and there is significant demand for skilled and unskilled labour driven by sectors such as agriculture, manufacturing, construction, education, health services and tourism.
The increase in population has created a buoyant professional services industry with strong demand for accountants, solicitors, valuers etc. There is affordable, quality housing with good access to required community facilities such as public transport, schools, health care and sports facilities.
There is a current state government strategy to decentralise its workforce away from Melbourne. Ballarat has been earmarked as a place to base government departments. The affordable space appeals to the government and the lifestyle opportunities appeal to the employees.
Certain industries are also re-considering where its manufacturing bases need to be. The recently on line Ballarat West Employment Zone, a large scale industrial land subdivision, saw 80% of its first stage sold within the first 12 months. Purchasers who will employ around 100 people each advise the time to port for a truck from Ballarat is similar to that from Dandenong South but the land is exponentially more affordable.
However, Ballarat is not an island. Any macroeconomic downturn or a material increase in interest rates would impact the local residential market. However as the industries which drive the market are sustainable and in the case of education and health, subject to almost inelastic demand, the market is insulated as much as is possible.
The market for all residential property types has generally remained steady and affordable for purchasers at all price ranges. This is due to the continued supply of new residential land on Warrnambool’s periphery with the typical 650 to 700 square metre parcel of vacant land selling for $140,000 to $150,000.
Local agents are reporting an increase in demand for Central Warrnambool, with a small snapshot of sales showing growth of approximately 10%. The lack of supply in Central Warrnambool is a key driver of this increase.
Historically, Warrnambool has been somewhat removed from outside influences such as interest rate rises, as the majority of properties are owneroccupied. Investors active in the Warrnambool area generally operate in the sub $300,000 space and are generally not heavily geared. This generally gives investors some room to move if interest rates rise.
Warrnambool’s key industry sectors, healthcare and dairy product manufacturing, are likely to remain strong with the continued expansion of public health infrastructure. Warrnambool has sustained a steady decline in its unemployment rate, a rate that has been lower than the state average since 2016. Low levels of unemployment have yet to translate into a genuine market movement of increased values.
Smaller surrounding towns, in particular, Koroit, have yet to suffer any negative movement in values or rent levels caused by the sale of Murray Goulburn.
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.