The month in review: Regional VIC
By Herron Todd White
The Ballarat residential market has had a strong start to the year with steady volumes of sales. The higher price bracket of $700,000 and over has performed well with strong demand. Lake Wendouree has performed well with high demand and high prices achieved. Period style housing and large allotments are proving to be highly sought after and are achieving premium prices. This market has shown some success with auctions and short periods on the market. A notable auction result was 6 Service Street, Lake Wendouree, a deceased estate, which achieved $1.215 million.
The lower end of the market, sub $300,000, continues to perform well, providing opportunities for investors and first home buyers. Suburbs in this market that have been performing well are Ballarat East and the southern areas of Wendouree, close to the schools and shopping facilities. Demand and availability within this bracket remains constant with good rental returns.
The unit market in Ballarat is beginning to slow with an increased supply of unit developments. The unit developments are strongly driven by investors where rental returns are strong. The low interest rates continue to fuel investment interest, however possible changes to negative gearing following the forthcoming election have the potential to affect the investment market such as unit developments which provide minimal capital growth.
The mid bracket of $300,000 to $600,000 has been slower to date with continual supply of new land estates and the option of building new houses. Within this bracket the stronger performing suburbs are Brown Hill and Lucas. Delacombe has remained fairly static with the oversupply of new housing estates coming to the market.
Overall, the Ballarat region has had a strong and reliable start to the year and is expected to continue in this manner for the rest of the year. The election may slow real estate transactions for a short period but it is unlikely to create any dramatic changes to the sector.
The local residential markets have continued to bubble along relatively strongly mostly on account of a lack of supply. Sales in the standard mortgage belt of $350,000 to $450,000 and new homes are ticking along at average rates. There have been several strong sales in Moama including a record sale in Perricoota Run (under contract) significantly in excess of $800,000 after the previous record of $745,000 which was relatively short lived. The strong performer has been rural residential holdings with what seems to have been a run of relatively strong sales in and around Echuca after a relatively strong period of demand.
Five to six months into 2016 and the property market is considered stable with minimal movement in prices. An impending election can cause trends and actions to be conservative, however discussions with local real estate agents reveal optimism heading into the next six months, with evidence of long listings starting to sell. Below is a summary of the cities and towns throughout Gippsland.
This niche market with the strength of the RAAF Base maintains positive results. Sale has limited areas to build, which therefore strengthens established markets throughout central and east Sale. Rentals are as high as they have ever been. It’s currently a buyer’s market and is a good time to invest in a strong stable market.
Land prices are very affordable with a high supply of land. The construction industry is strengthening, with high opportunities to build quality homes at affordable prices. We have also seen three sales between $700,000 and $800,000 in the past 12 months.
The market has recovered in recent times after a slow 2015. The new Heritage Estate is popular with high quality homes and new houses selling quickly when on the market. At the lower $100,000 to $150,000 end, investors can achieve 8% plus returns, however the low quality of homes and the demographic profile are considered a risk.
Surprise packet number one – Trafalgar is bucking the trend, with land prices increasing with demand for new estates and high quality builds. Sales of $500,000 plus are occurring more often in 2016.
This is a stable market with increasing demand for new construction. Land estates are developing quickly with increased demand. Just over an hour from the city, the Warragul and Drouin markets are definitely ones to watch. We also note two new real estate agencies have opened in Drouin in the past six to 12 months.
Koo Wee Rup
Surprise packet number two – approximately 45 minutes from the city, Koo Wee Rup is seeing Increasing demand for new residential estates. Within 12 months, land values have jumped from $190,000 to $220,000. Phillip Island and the Bass Coast have seen steady numbers of listings and properties are selling within a reasonable period, however, there has been no noticeable increase in market values. Phillip Island and Bass Coast have seen stable growth in the construction of new dwellings and vacant land.
Rural localities consisting of small holdings have seen limited sales with stable market values throughout the district.
Venus Bay has a higher than average number of properties, both dwellings and vacant land, listed for sale. After some fluctuation in values over the previous few years, the market appears to have stabilised and no noticeable change in value has been noted in the past six to 12 months.
In summary we are in a buyer’s market, with many options for the investor and plenty of opportunities to build the dream home at a reasonable price.
The residential market in Mildura has maintained a steady pace so far this year, with most listings in the $250,000 to $450,000 price bracket selling within three to six weeks. However despite the steady activity, values have stayed about the same, suggesting that we have a reasonable balance of buyers and sellers at this main local price point.
Demand appears strongest for modern homes, with older, dated homes receiving less interest. Homes up to $500,000 are meeting the strongest demand, and it is clear that there are fewer buyers currently competing for homes above say $600,000. This might suggest fewer professional people have moved to Mildura in the past six months. It is hard to say whether this is a definite trend or just a blip in activity.
Most local builders are busy, with a number of recently released residential subdivisions providing an adequate supply of serviced sites for local buyers.
Most of the building is currently for owner-occupiers and low interest rates are likely to be assisting this activity. Land values have held up well, with some increases evident in preferred subdivisions. Prices of over $100,000 for a serviced lot are becoming more normal, with developers forced to pass on higher headworks charges.