The month in review: Regional VIC
By Herron Todd White
The residential market in the Ballart area will face some hurdles in the coming 12 months. A recent change of government in Victoria will see a decrease in the amount of money the government will inject into the economy as a whole; this will have a trickle down effect to the residential property market. Having said that the reserve bank it appears is now considering decreasing interest rates, this perennially has a positive effect on the property market as an entirety. These two factors will be the fulcrum upon which the market will sit for the coming 12 months. The stronger of the two forces will dictate its eventual direction.
The areas in the Ballarat market which will be interesting to keep an eye on in the coming year will the developing estates. Increasing infrastructure and development in the Insignia and Lucas estates over the past 12 months have increased there liveability, amenity and overall appeal. As such the supply of quality property in a close vicinity to the Ballarat CBD has increased. The effect this will have on the modern home market in other estate areas less than six years old will be instructive as to the level of demand in the area.
Of the inner Ballarat suburbs Ballarat East appears to be comparatively affordable as compared to its more fashionable neighbours Black Hill and Soldiers Hill. The average dwelling price in the area is very affordable at around $300,000 which includes a reasonable block of land. The area is very close to the CBD with attractive streets and many period properties which would respond well to renovation. In our opinion the area is ripe for gentrification.
Of the price points to be aware of it appears the $1.2 million plus market has stagnated. There have been several prestige properties which have been on the market since the commencement of spring which has been unsuccessful in finding a purchaser. This market has shown significant growth over the past 10 years in a large part due to its affordability in comparison to Melbourne prestige market. However as that comparable affordability has dissipated so to has the growth of the sector.
The Horsham property market started 2014 with a bang following a number of good years in the surrounding farming district. The residential property market was hot with buyers tripping over each other at auctions and often paying above market odds to secure a property. Later in 2014, the market slowed significantly as the community waited for rain to fill crops. The poor 2014 local harvest and below average yields in the Wimmera is likely to see the Horsham residential market above $250,000 ease in 2015 as local owner occupier spending slows. Properties in the lower price bracket are expected to remain commonly traded although at lower volumes, and values are expected to remain relatively static thanks to steady investment for rental returns and
first home buyers in this lower end market.
Properties within close proximity of amenities, the hospital, river and shops are likely to be the best performing in 2015.
In 2015 we expect to see a continuation of the improved buyer activity that was evident in much of 2014, and see no reason why prices for mid range properties should not continue to firm. This improved activity is most noticeable for dwellings in the $200,000 to $400,000 range. Buyers are continuing to look past those properties in poor condition, and the pool of buyers looking to spend over $400,000 remains relatively low.
Developers have enjoyed relatively short selling periods and higher sale prices for those subdivisions
completed in 2014, and we expect this trend to continue, mainly due to a shortage of serviced lots on the market.
This trend has been evident with both “in town “subdivisions – containing average lot sizes of around 600 square metres to 700 square metres, as well as rural residential subdivisions containing 4,000 square metre lots.
We have seen an increase in rents for both homes and units during the past three to four years on the back of a shortage of available accommodation, and this trend seems likely to continue. Most agents are reporting that their occupancy rates are in excess of 99%, and that properties are being re-let within 1 week of becoming vacant. This will likely flow through to further rent increases, which in turn would be expected to keep investors attracted to our region and underpin the market for the foreseeable future.
Gippsland and Latrobe Valley
Late 2014 showed an increase in sales activity, however prices remained similar to 2011 and 2012. The overall feel of the 2015 market is similar with prices estimated to maintain at 2011 and 2012 values with the possibility of slight increases. Traralgon has seen a spike in residential development with increased vacant allotments becoming available.
This has seen Latrobe land prices decrease in recent years due to a larger supply. There have also been some competitive building prices promoted in an attempt to stimulate new home builds.
Rents remain strong throughout Latrobe Valley and have increased in the Sale and Maffra areas due to increased employment and higher demand. Sale is worth watching with the possible expansion of the
East Sale RAAF Base and current development of a gas conditioning plant at ESSO’s Longford site.
Coastal areas along the 90 mile beach including Loch Sport, Golden Beach and Paradise Beach remain slow
to steady with a large number of vacant residential allotments and houses on the market for extended
periods. However they are seen as quite affordable, at $40,000 to $50,000 for a vacant block of land. In summary, the market throughout Latrobe and Wellington shires is seeing some real positivity and increased market activity.
Early signs are showing that what we experienced in late 2014 will be maintained in 2015.
Baw Baw Shire
The residential market around Baw Baw Shire is expected to continue as it did in 2014 with stable to minor increases in prices. Rural residential properties have shown a minor increase of approximately 0.5% to 1.5% in terms of resale prices from the previous 12 to 18 months.
Some of the older pockets of Drouin, Warragul, Yarragon and Trafalgar have been popular with DIY home renovators with some properties selling between $250,000 and $290,000.
Some of the new residential subdivision land in Drouin appears to have stagnated in price and volume sold, possibly due to oversupply.
During the latter months of 2014 within the Baw Baw Shire there were two main forms of trading up. First is the second home buyer who is seeking a newer, larger, better equipped home on a residential allotment. The second type is the move out of town buyer, who is looking to occupy the acre block on the edge of town or a larger outlying rural property. This recent activity is expected to remain for the most part of 2015.
As with 2014, the market in 2015 is expected to remain stable with potential for slight price increases in the $350,000 to $400,000 range up to the $1 million plus rural residential market as locations such as Warragul, Drouin and Neerim South become popular destinations for willing south-east Melbourne buyers looking for more bang for their buck.
In the latter months of 2014, house prices in the area remained fairly stable although sales seem to be increasing slightly which would suggest a continued increase in early 2015 as consumer confidence
continues to rise.
Overall, 2015 in the Baw Baw Shire (West Gippsland) residential area is expected to remain stable with the potential for slight increases in prices and sales activity.
Similar to the Latrobe Valley, East Gippsland experienced increased sales activity in the latter half of 2014. Some months throughout the year were stronger than others. It is envisaged that prices will remain steady throughout 2015 while sales activity increases slightly in line with consumer confidence. A number of recent residential subdivisions, such as Shannon Waters Estate on the western fringe of Bairnsdale, has seen increased house and land packages being acquired. Sales within these estates are expected to remain steady throughout 2015 as building companies offer competitive house and land packages. Second and third home buyers looking to upgrade make up the main market segment purchasing house and land packages.
The preference for rural residential properties is also expected to remain steady throughout 2015 in areas such as Nicholson, Wy Yung and Eastwood.