Regional VIC May 2017

The month in review: Regional VIC

By Herron Todd White
May 2017

The local market continues to be relatively strong with generally tight supply on account of limited residential land supply in the past 12 to 18 months, although this is likely to be alleviated in the short term by additional supply in both Moama and more particularly, Echuca. Average pricing has pushed up in recent times with good demand and limited supply in the $350,000 to $450,000-bracket resulting in an upward shift in demand for properties priced in excess of $400,000 for mortgage belt-type properties.

Melbourne buyers continue to underpin the higher end of the market with several off-river sales in excess of $800,000, particularly in Moama for custom-built and well-finished properties. The buoyant agricultural sector has also been a positive for the local economy.

A slowdown in the market in Melbourne or closure of a significant factory would likely affect the higher market segments and mortgage-belt segments respectively, although there is likely to be significant cushioning from any metropolitan softening because the local market has not charged ahead at the same rate, with local prices more likely to plateau.

The Baw Baw, South Gippsland, and Cardinia markets are strengthening. This includes cities and towns such as Warragul, Drouin, Nyora, Lang Lang, and Koo Wee Rup.

Regions such as Morwell and Heyfield have recently had negative press regarding the forthcoming closure of Hazelwood Power Station and Heyfield Timber Mill. It will be interesting to see how the market responds.

Sale has recently had some higher end sales in the $700,000 to $1-million range with increased buyer interest in prestige properties.

Despite the housing market being active, very modest growth has been seen in housing prices over the past 18 months. Houses and units are selling after relatively short selling periods of usually less than 30 days, and Mildura’s local economy appears to have strengthened over this period. Despite this, it seems there is not quite enough competition among buyers to see any significant capital gains.

The missing ingredient seems to be population growth. The latest statistics indicate that Mildura’s population is growing at just under 1% per annum and while this is enough to maintain momentum, it is not flowing through to any substantial price growth.

Employment and lifestyle factors are the things that will influence population growth outlook. On the employment front, there is ongoing optimism in key agricultural industries and this is likely to create opportunities in farm work, transport and logistics, agronomic services, and some downstream processing; however, growth in tourism, retail, or mining would be needed to see the growth in jobs required to bring significant numbers of families to the region.

What is clear is that Mildura has enough size and economic diversity to weather any economic downturns reasonably well.

The migration of older people from surrounding towns and regions choosing to retire to Mildura is expected to continue. For this sector, it is lifestyle and availability of medical services along with affordability of housing that will influence their choice. Mildura appears to stack up well in this regard.

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