The month in review: Regional VIC
By Herron Todd White
The Ballarat residential market, like the rest of the Australian economy, will not be without it challenges in 2016. Macro economic factors such as the success of Australia’s transition from a resource driven to service driven economy, the mood of the various regulatory bodies and the ability of our elected elite to remain united behind one leader will play a major hand in its fortune.
More locally, the direction and ferocity with which the market door will swing will depend on the continued state governmental inclination to decentralise Victoria. In addition to the continued popularity and population growth of the area and the success of the local economy.
The good news for the area is that none of these drivers appear at present poised to pull the plug on the place. The bad news is, nor do they elicit an inclination to provide us with a path to the promised land.
And so the great unwashed are left to wake up, frock up and front up. The fundamentals of the residential market are sound if not strong, yet only the most bullish would foretell a 2016 Ballarat boom. So how will it play out? This correspondent feels the year will play out as tug of war between positive local sentiment and what will be on balance, at best, a flat macro economic climate
As usual, the property with the greatest chance to grow will be that with limited supply close to the CBD such as Ballarat Central, Lake Wendouree, Soldiers Hill, Black Hill & Golden Point. Areas with significant challenges will be those with over supply issues such as the new estates in Delacombe and Lucas.
Let the year begin.
The median house price in Warrnambool has had little growth over the past five years and this trend is expected to continue in 2016. The current market can be described as a buyer’s market and we expect this to continue for the remainder of 2016.
Central Warrnambool will remain the market to watch this year. There is an increase of buyers in this area and most see this year as an opportunity to buy centrally before the market gains some strength. Properties within this bracket are generally located within close proximity of the CBD, beach and hospital.
The oversupply of vacant residential land within Warrnambool remains a talking point and an area that should be treated with caution. This supply and lack of demand is starting to have flow on effects on land values both in new subdivisions and established northern suburbs, with some developers offering incentives to help sell land. North Warrnambool remains an affordable market on the back of the oversupply of vacant land with properties being purchased for under $350,000.
The Horsham residential property market has drawn an outside gate for the start of the 2016 race and will have to work hard to get around the subdued demand and lack of market confidence to get to the fence by the end of the financial year. The track is likely to be slow, especially at the top end of the market with a limited buyer pool. Unit values are likely to remain stable due to an over supply of stock but modern homes in the centre field ($300,000 to $400,000 owner-occupier market) are expected to run a solid race due to maintained strong demand and limited rental stock. The volatility of the rural residential market will be closely watched throughout the race in 2016.
The tail end of the field ($100,000 to $200,000) represents longer odds but maintains affordability compared to the centre field.
2015 was a strong year across most market segments in Echuca Moama with some segments doing particularly well including those with river frontage or a river aspect, well improved houses in Moama’s Highlands Estate and some improvement in sales rates for centrally located properties. Individually we saw multiple sales of river front properties in excess of $2 million and several in excess of $1 million throughout the course of the year with lifestyle blocks featuring river frontage (nil permit for a dwelling) also selling strongly.
With no more land available in the Highlands, development vicinity prices have gradually pushed up with many sales in excess of their replacement cost as buyers look to secure a property in a modern development within close proximity of town. The Murray Banks, Winbi and Perricoota Ryun development land sales have all been relatively good throughout 2015. Meanwhile central Echuca finished the year relatively strongly with the sale of a refurbished period style home for approximately $940,000 showing a return to demand in this segment.
With extensive development in Echuca to the west and Moama through Barbers Paddock, Murray Bank, Winbi and Lake View Estate it will be interesting to see how the market absorbs the new lots throughout 2016. A tight rental market may well result in further demand for vacant land given the lack of supply of stock most agents are reporting.