The month in review: Regional VIC
By Herron Todd White
Ballarat has a diverse demographic with varying industry drivers. The main industries driving property demand within the Ballarat area are manufacturing, health and education. These industries provide for a diverse demographic and in turn property demands. The Ballarat property market provides an affordable option for young families and also a good lifestyle for Melbourne commuters.
Currently the upper end of the Ballarat market is showing good demand with Ballarat providing an appealing lifestyle option for Melbourne families due to its easily commutable distance to Melbourne, good infrastructure and high quality education and services. Properties in the upper end are in short supply and are experiencing short periods on the market with good quality properties achieving high prices.
Within the lower market ranges of Ballarat, movement is fairly static for both established houses and property within the newer suburbs and housing estates. This is due to an oversupply of new land available from numerous new land developments which have recently come to the market. While this end of the market is currently static with little growth, the longer term outlook for capital growth in Ballarat remains positive with good population growth forecast and the creation of many new jobs with the new Ballarat West Employment Zone.
With a diverse demographic, Ballarat provides a stable investment prospect with good returns on rentals in the lower demographic suburbs. Ballarat has seen a shift toward unit developments which has resulted in a current oversupply of units. Capital growth is likely to remain static for some time with limited demand for these properties.
One of the key drivers of the local markets in Echuca/Moama is the number of buyers relocating from Melbourne. Typically these buyers come from a relatively high market to a significantly more affordable market in Echuca or alternatively look to upgrade significantly from their dwelling in Melbourne in the transition. Typically this underpins the higher segments in the local market including centrally located heritage homes along with river front properties with good appeal.
Typically this level of demand spikes through spring and leading up to Christmas as people look to relocate for the new year (particularly teachers, but also the general migration of the labour force for example in professional service industries). When this occurs, the rental market tightens significantly.
Industry within the Wellington and Latrobe regions are the highest driver of our markets. For Sale and surrounds, the East Sale RAAF Base and ExxonMobil gas processing and oil stabilisation plants are high employers and bring new buyers to the market. Over the past 12 months, rental prices have been very competitive but recent signs have shown a steading in demand.
For Latrobe, three major brown coal mines with affiliated power stations and a paper mill are the highest employers and are drivers within the market. We are yet to see a change in market conditions with recent calls to find renewable, cleaner sources of energy.
Historically the Warrnambool property market has been relatively unaffected by outside influences and remains somewhat removed from typical market drivers such as mining, tourism or work opportunities. Being surrounded by a large agricultural area, Warrnambool’s economy tends to suffer when downturns occur in rural markets but this doesn’t seem to transpire to the property market.
First home buyers are the demographic which appears to be driving the Warrnambool property market at present. Together with low interest rates, home affordability and excess residential land, this demographic will continue to be the driver in the foreseeable future.
Locations such as North Warrnambool, Dennington South and North, Gateway Estate and the Hopkins Point Road estates are the areas where this demographic is most prolific with established dwellings able to be purchased for between $250,000 and $350,000 and house and land packages available from $280,000.
Regardless of the demand in these areas we have seen no increase in the median value in this sector for approximately five years. The only growth occurring in Warrnambool at present appears to be in central Warrnambool locations, where there is a current lack of demand and properties spend less time on the market.
Population growth has long been considered the key to whether house prices go up or down and so the biggest driver of our property market is whether our economy and lifestyle can attract people. A glance at the data provided by Regional Development Victoria shows that in the past few years, the population of the Mildura Local Government Area has been growing at just under 1% per annum, compared to the Victorian state average of around 1.75% per annum.
Our main industries in terms of employment are agriculture, retail and health care and social assistance.
In the past two to three years we have seen an improvement in some of the key local farming industries, especially table grapes, almonds and citrus, and we are now starting to see the first shoots of an improvement in the wine grape industry. This confidence has increased demand for local service industries that support the local farming sector and for the next few years at least, it appears as though this segment of our local economy should grow.
The retail sector is expected to maintain current levels of employment but is considered unlikely to grow. With regard to health care, Mildura has a higher than state average percentage of the population aged over 55 and is expected to continue to attract older people from smaller centres within a 300 kilometre radius due to the presence of good medical and recreational facilities and relative housing affordability.
We feel that the local economy is currently enjoying a period of growth and that this will see our population grow at a faster rate than has been occurring in recent times. Housing that is attractive to retirees is expected to continue to see good demand, as will three or four bedroom homes that appeal to young families.