Regional VIC

The Smartline Report – October Edition

The month in review: Regional VIC

By Herron Todd White
October 2015

Gippsland
Latrobe Valley
The median sale price for houses in Traralgon this year is around the $260,000 mark. Property in this price range will typically be a 1980s 3- or 4-bedroom brick veneer on a 700 to 800 square metre block in basic condition. This price range is the perfect point for young professionals to enter the market, or upgrade with the opportunity to renovate.

In Morwell, the median price for 2015 thus far is around the $150,000 mark. This will generally fetch a 1960s 3-bedroom weatherboard dwelling. A high volume of the properties in this market are rental properties.

Wellington
In the Wellington Shire area, housing in the $250,000 to $350,000 bracket continues to perform well. This bracket comprises entry level, older style 3-bedroom brick veneer dwellings in established locations, to small dwellings with basic construction in modern residential estates.

Housing in this price range generally experiences shorter selling periods and higher rental returns due to the high volume of interest from first home buyers and investors.

The announcement of the new Flight Training School at the East Sale RAAF Base should ensure continued solid performance from this market sector.

Ballarat
Houses
The price sector which appears to be the most buoyant in the Ballarat dwelling market at present would be the $200,000 to $350,000 bracket. Almost all suburbs of Ballarat have properties in this price brackets but some are performing better than others. Areas such as Ballarat Central, Soldiers Hill, Black Hill, Ballarat East and Golden Point have shown some good growth in the past 12 to 24 months.

The main drivers of the market in these areas is the scarcity of land, aesthetic appeal of the period properties, proximity to infrastructure, strong rental returns and the relative affordability.

The flow on effects in the near term would be the stagnation of some new areas in the region such as the new estate areas of Lucas and Delacombe. However in the event the prices close to town continued to grow, the new estate areas would become more attractive as purchasers would compare the two and perhaps begin to see greater value in a house and land package scenario.

The performance of the sector is sustainable over the coming year as the growth is modest (from 2% to 5%) and the local economy is strong. The state government has just announced its intention to inject around $15 million into the economy over the next two years.

Examples of house price growth include:

• 706 Howard Street, Soldiers Hill sold in May 2008 for $177,000, then again in the same condition for $235,000 in May 2015.

• 306 Havelock Street, Soldiers Hill sold in July 2008 for $180,000, then again in the same condition for $237,000 in April 2015.

Units
The price sector which appears to be the most buoyant in the Ballarat unit market at present would be the $100,000 to $250,000 bracket. Not all suburbs in Ballarat have units in this bracket. The suburbs with units in this range performing well are spread across town and include Wendouree, Soldiers Hill, Golden Point and Ballarat Central.

The main drivers of the market in these areas is the scarcity of cheap accommodation in the area, strong rental demand and returns and relative affordability.

The flow on effects of the growth in the near term would be an increase in development of affordable medium density properties such and 1- and 2-bedroom units. This would increase the supply to the rental market which may satisfy the demand and ease the capital growth and rental growth.

The performance of the sector is sustainable over the coming year as the growth is modest (from 2% to 5%) and the local economy is strong. The following example illustrates the price growth:

• 2/304 Clarendon Street, Soldiers Hill sold in June 2009 for $143,000 and again in the same condition for $190,000 in April 2015.

Warrnambool
Houses
The housing market between $300,000 and $400,000 is the hottest market within Warrnambool at present. The majority of these sales occur in North Warrnambool where you can expect to purchase a 3- or 4-bedroom, brick veneer dwelling constructed within the past ten years.

The drivers behind this market are the strong rental returns investors can expect to achieve and the affordability for young families who want something new without the hassle of building. Although there is somewhat of a demand for this type of property we have not seen significant increases in value due to the current supply of land within Warrnambool. This statement is true for the entire Warrnambool residential property market which has seen little increase over the past 24 to 36 months.

Due to the current availability of residential land and demand for newly constructed dwellings, older constructed dwellings appear to be the property type being hit hardest, with a decrease in value and demand for properties built in the 1980s and mid 1990s. This current trend appears to be sustainable for the foreseeable future.

Units
Units within the Warrnambool property market are in good demand at present. 2-bedroom units priced between $225,000 and $275,000, and newly constructed 3-bedroom units priced between $325,000 and $375,000 are the price brackets most prominent. These markets are spread across Central Warrnambool and North Warrnambool with the key drivers being strong investment returns and affordability for retiree couples looking to downsize.

Similar to Warrnambool’s housing market there has been limited increase in values over recent times with this current trend expected to continue for some time. 1-bedroom units appear to be experiencing a softening in demand due to little capital growth, with the majority of purchasers aiming for a mixture of capital growth as well as good returns found more commonly in 2- and 3-bedroom units.

Echuca
The Riverine Herald property section last Friday was as skinny as we can recall for a long time. Either the local agents have pulled back on their advertising budgets or there is a genuine dearth of properties available for sale coming into the spring selling period. A lack of stock may push buyers into building so land sales may improve as a result or alternatively there may be some extra supply come onto the market as vendors look to participate in a market with limited supply. Most agents are suggesting that they have clients in the pipeline so it will be interesting to see how things progress.

The limited supply has probably had the greatest effect on the mortgage belt for standard 3- to 4-bedroom dwellings in the $350,000 to $450,000 price bracket along with the lower segments of the market.

Horsham
The Horsham residential property market is currently being led by the large modern brick veneer homes which have consistently been improving in value for the past six months. The well regarded courts in modern subdivisions are generally displaying the greatest growth. Typically this is property close to the Wimmera River and comprises 4- or 5-bedrooms and 2-bathrooms on an 800 to 1,200 square metre block. Current drivers for this market segment are strong local business growth and continued demand for improved lifestyle and creature comforts.

The recent growth in the upper end price bracket from $400,000 to $600,000 is beginning to impact the mid price range older housing stock from $300,000 to $400,000 and small price movements have been experienced in some sectors of this market in recent times. The price movement has seldom reached the lower end price bracket.

An example of this top end growth is the sale of a 3-bedroom, 2-bathroom modern home on McPherson Street that sold in May 2014 for $450,000 and recently re-sold in June 2015 for $470,000 which displays value growth of 4.4% year on year.

Unit sales remain limited in the Horsham market due to the relative affordability of housing.

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Please note that information in this publication is subject to change without notice. Smartline assumes no responsibility for any errors, omissions or mistakes in this document. © Smartline Home Loans P/L 1999 – 2015. Australian Credit Licence Number 385325

 

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