Regional VIC December 2017

The month in review: Regional VIC

By Herron Todd White
December 2017

Ballarat

The Month in Review filing system here at HTW Ballarat is well overdue for an overhaul, but after an inordinate amount of time sifting through the dusty recesses of our sent items, our predictions for the year which is rapidly coming to a close were located.

After a quick read, it appears that although not earth shattering, our predictions have in general been accurate.

To summarise, we proffered that quality period dwellings in quality locations would do well, as would lifestyle properties. We also contended that second tier green field estates would remain static and that there was good growth potential for period properties in second tier suburbs close to the city.

Reflecting on the piece, there were a couple of unforeseen occurrences. As above, we expected the top tier residential market to grow, but were not so bold as to predict the bull which bestrode Sturt Street in 2017. There were double the amount of residential properties sold above $1.25 million which did not have frontage to Lake Wendouree in 2017 as there were in 2016. (Source: RP Data). The why however is always more instructive that the what. So why was this?

The local economy has remained vibrant, underpinned by the traditional triumvirate of manufacturing, education and health services. State and local governments have continued to market the area successfully.

There was a feeling among those in the know that there were sections of Ballarat which were perhaps undervalued when compared to locations in similar cities such as Bendigo and Geelong. It could be argued that 2017 has seen this perceived gap close and there have been further advances in train services to Melbourne.

But no man or market is an island and without doubt, the strongest driver of the top tier Ballarat market is the strength of the Melbourne residential market. A continuing and growing stream of purchasers with a family, a career and a gutful of trying to purchase a home in the suburbs to nurture them all continue to venture west, past Melton to Ballarat, a city with an old soul, a rebellious streak, a strong heart, a timeless face and detached 3-bed 2-bath at the right price.

We were similarly unable to find in our tea leaves the strength of the Wendouree market. This area has historically been a second or third tier suburb offering basic accommodation to middle and low income households. While the area has not seen Collingwood style gentrification, its popularity and population has seen significant growth over the year. Agents have reported that large amounts of retirees and investors have been active in the market seeking affordable property with good access to amenities and good rental returns.

The vacant land and new dwelling markets in the new estate area of Lucas, Alfredton and Winter Valley have had mixed fortunes. Lucas and to a lesser extent Winter Valley appear to have now gained a critical mass and have really gathered some pace in the year due to the opening of Delacombe Town Centre and further commercial spaces at Lucas.

Vacant land and new dwelling sales in the estates have been strong with modest value increases.

There is an emerging second tier in the green field estate market in Ballarat. 2017 saw several new estates open and begin to market and sell lots. These include Champions Estate, Winterfield, Pinnacle and Ballymanus. Values in these areas are static but the large supply means they are under negative pressure. The next 12 months will give a good indication of the ability of the market to absorb the supply.

The rural lifestyle market has been the final big winner of the year. Areas close to town such as Invermay, Brown Hill, Mount Helen and Buninyong have seen significant growth. The popularity of this type of property has burgeoned in the past five years and the growth in the market has reflected this demand. Critically, there is very little rural residential land remaining in the popular areas and so like any asset with limited supply we expect this trend to continue.

The strugglers for the year have been second grade dwelling and townhouse stock in areas such as Sebastopol, Mount Pleasant and some sections of Canadian. These properties also suffer from an over supply issue. The supply has slowed but it will take some time to see capital growth in these dwellings.

Echuca

The residential market has shown no signs of slowing down in a year of further tightening and an increase in off market sales as agents have multiple buyers interested in property before it hits the market. In many instances this results in the asking price or a touch stronger being achieved. This is consistent across almost all market segments with tightening market conditions spreading into rural residential holdings which historically required marginally longer selling periods. Land sales west of Echuca have been well received amid limited competing supply while Moama has continued to see significant development. Nevertheless there is still an imperative to having properties listed correctly with older stock at secondary locations probably being the only slight drag on the market. Builders are busy and the market is likely to stay tight for some time, particularly the rental market on the back of commencement of the second bridge.

Mildura

A look in the rear vision mirror for 2017 shows that there weren’t too many surprises in the residential market for Mildura. As we forecast at the start of the year, demand remained strong for better standard homes and for vacant residential lots. The decision of both the Victorian and NSW state governments to continue attractive first home builder’s grants assisted with the latter segment.

The sector which seems to have received the strongest demand and the highest capital gain is large lot rural residential housing, with buyers snapping up the available properties on lots of around 2,000 to 5,000 square metres in locations within a ten kilometre radius of Mildura. Buyers of these properties have generally been families wanting room for sheds or swimming pools. We have also continued to see migration of families and retirees to Mildura with many of these buyers able to afford better standard homes.

Values of lower standard homes have tended to remain stagnant.

The most expensive sale for the year in Mildura was for a home in Cambridge Terrace, which sold for over $1.3 million. This property occupies a 1,600 square metre lot, was built to a very high standard and included very good ancillary improvements. Meanwhile, the highest sale in the area outside Mildura was for a property at Boeill Creek with very appealing frontage to the Murray River which sold for $1.2 million. This property is located approximately 15 kilometres from Mildura and included improvements suited to horse enthusiasts.

Rental demand remained strong during 2017 and it appears that we continue to have a fairly evenly balanced rental market.

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