Regional VIC May 2018

The month in review: Regional VIC

By Herron Todd White
May 2018

Ballarat

The prestige property market in the Ballarat area is one that generates significant interest, not only from those who work, rest and play in it, but also from those who want to.

The prestige market in the area probably kicks in around the $1 million dollar mark, but things really start to get interesting north of about $1.5 million. These properties are generally situated in Ballarat Central, Lake Wendouree and Invermay with a smattering in Soldiers Hill, Newington and Buninyong.

In general terms, $1 million to $1.5 million in Ballarat at present will buy you a large fully renovated period dwelling on a block of circa 1,000 square metres. This property would be in a location rated around 7 to 8 out of 10. It would also get you a good sized lifestyle lot from two to 15 hectares in Invermay or Buninyong with a large high quality dwelling and good shedding.

If you have more than $1.5 million to $2 million to spend you will be able to get something on Lake Wendouree. It is at this level that the market is considered ultra-prestige.

There have been strong whispers of two transactions taking place in this market in the past six months, one sale on Lake Wendouree of around $4 million and one on Sturt Street of around $3 million. Although neither of these transactions have been confirmed they would be considered records for the area.

The market is being traded mostly by local high net worth individuals and people new to town who have come from markets where the quantum of cash perhaps doesn’t stretch so far. In general purchasers seem to seek high quality locations, with good sized lots and renovated period dwellings.

The main drivers of the market are the economic success of Ballarat as a centre. This can be measured by population growth, employment growth and perhaps even tourism growth. These three measures have performed very well in the past four years and as a result the prestige market has also shown significant growth. With further growth in these areas forecast as well as additional local and state government spending, we consider the future growth prospects for the market to be strong.

Gippsland

Bass Coast

The prestige residential market in Phillip Island is generally defined as properties ranging from $1.1 million to $1.5 million with ultra-prestige comprising of properties at $2 million and above. Properties achieving prices of $1.1 million and above generally consist of high quality modern 4-bedroom plus dwellings with ocean or bay views or alternatively, rural residential acreage properties.

The high end market in Phillip Island is predominantly driven by buyers from Melbourne and outer suburbs who are seeking either a holiday home or are relocating. They are typically seeking a high quality dwelling with water views. As a result the largely discretionary type buyer to whom prestige residential properties appeal can be greatly impacted by changed economic conditions. The high end prestige market within beachside locations can be prone to greater and more rapid fluctuations in sale volumes and sale price levels than the lower and middle markets. The lower and middle markets have seen a rapid upward spike in values however this trend has yet to be reflected in the high end market with little capital growth over the past 12 months in comparison to the entry level and middle markets.

Baw Baw

Prestige properties are rare in Baw Baw however some have recently sold. Most notable is James Court near the centre of Warragul which is currently under contract for $1.64 million. The prestige residential market typically starts at the $1 million mark with a mixture of property types. The $1 million mark will see purchasers obtaining a fairly substantial dwelling of above 300 square metres and substantial ancillary improvements.

Prestige rural residential property prices typically start at $2 million which would get approximately 20 hectares, a substantial dwelling, large shedding and improvements.

There are limited prestige units however there are penthouses and apartments located above the Mecure Hotel which are under contract for $600,000 to $700,000.

The prestige market in Baw Baw is comparable to the remainder of the market sectors in this area. Demand is strong from eastern Melbourne suburbs purchasers selling and relocating to the Baw Baw area.

The short term outlook is for continued strong growth with the medium to long term market predicted to cool to a more sustainable level of continued growth.

Wellington

The prestige market in Sale is situated east of the CBD incorporating older style renovated houses circa 1940s within the $600,000 to $1 million range.

To the south-east of the Sale CBD, both residential and rural residential properties incorporating a mixture of older and new houses that have wetland and district views are between $700,000 and $1.2 million.

Latrobe Valley

Just west and north of the CBD, older established homes in the Bridges, Albert, Mabel and Moore Street areas incorporate values of $600,000 to $800,000. North and north-west Traralgon is comprised of new homes of high quality with mountain views at price points of $700,000 to $1 million.

Mildura

We have often commented that the most active house price segment in the Mildura region is between $280,000 and $450,000. However, there are still a decent number of sales each year in the range from $450,000 to $800,000, and then a smattering of sales of prestige homes, at a figure above $800,000.

In the past 15 months or so, there have been 13 sales in our region above $800,000. Over the years we have often heard the comment that “if I am going to spend that much money, I want to be able to see the river” and it is true that many of the sales of homes above this level have frontage to, or views over the Murray or another water body such as Kings Billabong. The limited number of house sites with river views creates scarcity and this will always work to maintain values. There have been seven sales since the start of 2017 of prestige homes with river frontage, at prices of between $910,000 and $1.65 million.

However we are starting to see a greater willingness from buyers to acquire prestige homes which do not have river frontage. While our most expensive house sites do have river frontage, some of these sites now have homes which were built in the 1970s or 1980s, and so now have a dated appearance. Buyers, particularly younger people, show a preference for modern homes, and so in some cases have decided to forgo a river view in favour of a higher standard of home, particularly if they can have the trimmings of good swimming pools, tennis courts etc. Since the start of 2017 there have been six off river sales, at levels of between $820,000 and $1.35 million.

Many of the buyers of prestige homes in Mildura are professional or retired people, some of whom move to the region from a metropolitan area. Continuing to attract these buyers will be key to maintaining or growing the number of prestige home sales. Interest rates are likely to be less of an issue for these buyers.

The recent rapid growth in rural values across most commodity types is expected to create a number of wealthy retired farmers and we expect many of these to stay in the area. These buyers often seek properties on larger lots, with some shedding etc. and we expect this segment to also bolster buyer demand for prestige housing in coming years.

Bendigo

The prestige property in the Bendigo area as in many areas is the one which engenders the most ‘water cooler’ discussion.

As in many regional centres, the prestige market is considered to commence around the one million dollar mark. For a long time, there were very few properties traded north of this mark. However, the past 18 months has seen five transactions north of 1.5 million dollars.

These have been located predominantly on Forest Street and Barkly Street just north of the Bendigo and in close proximity to sporting facilities and parkland.

In general terms, one to one point five million bucks in Bendigo at present will buy you a large fully renovated period dwelling on a block of circa 1,000 sqm.

This property would be in a location rated around 7 to 8 out of 10. It will also get you a good sized lifestyle lot from 2 to 15 hectares in Jurnortoun or Segwick or Mandurang with a large high-quality dwelling probably a pool and good shedding.

The market is traded mostly by local high net worth individuals and people new to town who have come from markets where the quantum of cash perhaps doesn’t stretch so far. In general, the purchasers seem to seek high-quality locations, with good sized lots and renovated period dwellings.

The main drivers of the market are the economic success of Bendigo as a centre. This can be measured by population growth, employment growth and perhaps even tourism growth. These three measures have performed very well in the past two to four years period and as a result, the prestige market has also shown significant growth, With further growth in these areas forecast as well as additional local and state government spending we consider the future growth prospects for the market to be strong.

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DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.