Regional VIC June 2018

The month in review: Regional VIC

By Herron Todd White
June 2018

Ballarat

As winter’s grip tightens around the city, the market traditionally sees less stock transacting as vendors hold off marketing their properties until spring. This appears to be true again this year. Despite lower transaction numbers, the prices being achieved continue to be strong with quality inner city and period stock and rural residential property the standout performers.

A major upcoming project which is beginning to have a strong impact on certain sections of the market is the development which has been approved and commenced around the Ballarat train station. The land to the north and east of the train station which has long been a car park and open storage space is in the process of being developed into a large hotel and conference centre. Additionally, land on the corner of Armstrong and Mair Streets has development approval for a building of approximately eight levels which will be known as the Gov Hub or Government Hub. This building will be predominantly government office space and will become a workplace for around 200 people.

These two developments are creating quite the buzz among local traders in the area and from a residential perspective, are creating significant demand in the area. Not only will the developments increase demand for residential accommodation in the area, they will also beautify sections of the city which have been unsightly for some time. This demand will seep into the remainder of the Ballarat market and for that reason, we foresee continued sustainable growth in the residential market between now and Christmas. Elsewhere in the residential market, residential serviced lots appear to be selling well. There is a significant supply of lots in the more affordable south-western section of Ballarat around Alfredton, Symthes Creek and Delacombe. The development of shopping facilities at the Delacombe town centre has assisted this. At the upper end of the vacant land market however, there is a limited supply. Insignia Estate has sold out and the Lucas Platinum Estate has almost sold out. There is a new estate coming online in Ballarat North called Drew’s Paddock which is receiving significant interest.

The demand for these products primarily comes from increases in the population of the area. This population growth has been strong in the past ten years and it will be this continued growth that will dictate the success of the new land coming onto the market.

Gippsland

Bass Coast

Within the past six months, the Phillip Island residential market has seen strong buyer activity with a good level of demand resulting in increased capital growth. The entry-level and middle markets have seen significant increases in values in both existing smaller style holiday houses and modern dwellings. Agents are reporting a strong demand particularly for vacant residential allotments within new subdivisions with demand outweighing supply. Many purchasers are retirees from Melbourne’s eastern suburbs.

Baw Baw

The residential market for the Baw Baw Shire is predominantly driven by its two main suburbs, Warragul and Drouin, which are located just off the M1 Freeway and have a commute to the Melbourne CBD of approximately one hour. New housing is leading the market due to the numerous land subdivisions across these suburbs which are selling fast and often supply is very limited.

House prices have significantly risen in the past six to twelve months. Whilst rental yields remain strong there has been minimal movement or increase given the availability of stock. Continued demand from the eastern and outer suburbs of Melbourne will maintain consistent growth in this area for the remainder of the year.

East Gippsland

The residential market in East Gippsland showed modest improvements in median sale prices over the 12 month period to February 2018. However, more recent sales indicate a strengthening market generally with increased demand and improving sale prices across the board. Together with the improvement in the residential market, particular improvement has been noted in the rural lifestyle/ residential market which has been slow for some time.

Latrobe Valley

This time last year, the Latrobe Valley was doing it tough. The negativity and uncertainty around the Hazelwood closure had a negative impact on the local markets. However in 2018 and more specifically the past three months, we have seen an increase in buyer confidence. The Moe and Morwell markets have improved slightly and discussions with local real estate agents in Traralgon indicate that they are busier than ever. It seems the flow on effect of the Baw Baw market surge is slowly starting to move further down the highway. There seems to be many more Peninsula, Cranbourne and Melbourne southeast buyers coming into the Latrobe Valley market. The residential market appears to be recovering and early signs show a positive feeling heading into the rest of the year.

Mildura

The residential property market in the Mildura region shows no signs of slowing. Selling periods remain comparatively low, often below 30 days, which contributes to agents having a shortage of listings The main sector to see growth is the upper end of the market, with a higher than normal number of sales occurring above $600,000. Many of these sales are in the surrounding semi-rural areas of Irymple, Nichols Point and Gol Gol.

This sales activity points to strong confidence in the local economy and is likely to also reflect a bit of a rub off effect, with some buyers having sold properties in metropolitan areas. In last month’s Month In Review, we commented that the dramatic improvement in rural land values was providing an impetus for older farmers to plan their retirements and that we expect that this will bolster demand for better standard homes.

In the past month, we have seen several examples of this occurring, including the sale of a riverfront property at Gol Gol for over $2 million. Values appear relatively stable in the lower end of the market, while mid-range properties appear to have risen by around 4% to 5% over the past two years.

Building activity remains strong, with a number of residential subdivisions selling quite quickly. The value of serviced lots has risen faster than established housing over the past few years due to a limited supply, which has helped developers recoup the higher cost of completing subdivisions. It is hard to see anything causing the current strong conditions to weaken during the remainder of 2018.

While it appears that the Melbourne market has peaked, we expect that the Mildura market will continue to improve or at least remain stable.

Bendigo

The Bendigo residential market continues to perform well with steady growth across most segments on the back of growth in population and low interest rates. Established properties in central locations are seeing strong demand with older period style homes currently being in vogue. House and land packages on the city fringe have slowed on the back of increased supply.

The surrounding rural residential/lifestyle market is considered stable with steady demand and supply at present.Local selling agents are reporting a shortage of stock across all segments which is to be expected as many vendors wait until the warmer months to market their properties.

Small to medium-sized developers are active, putting units and townhouses to the market with success. This is predominantly within the central suburbs of Bendigo on infill sites and marketed to both investors and first home buyers. Yields across Bendigo are generally slightly lower than that of other regional cities however the stable market conditions still attract investors. The outlook for the Bendigo residential market is good with steady growth forecast. Many people will be following the RBA’s decision on interests rates as this has the potential to reduce demand on a macro level.

Echuca

The residential market came slightly off the boil in the first half of 2018 with reasonable prices still being achieved although demand seems not to be as fierce as it was leading into the tail end of 2017. Nevertheless, there is still strong competition for listings from agents which suggests that there is not an oversupply which is typical for the winter lead up.

The spring campaign will bring immense interest with recent strong demand for riverfront properties and generally favourable interest rates. The mortgage belt continues to potter along although the upper end of the market ($500,000 plus) appears to be slightly slower at this moment in time with significant supply, particularly north of the border.

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