Regional VIC September 2017

The month in review: Regional VIC

By Herron Todd White
September 2017

Ballarat

As housing affordability in Melbourne continues to be a major issue, people are looking to regional areas as a way to get their foot in the property market. The Melbourne buyer has entered the Ballarat market targeting centrally located properties and more specifically properties within close proximity to the railway station. Soldiers Hill situated north of the railway station has experienced steady growth over the past year with the median house price in April 2017 at $365,000 up from $318,000 the same time last year. Central Ballarat and Alfredton also experienced a 6.5% increase in the first quarter of the year.

Market confidence in Ballarat continues to rise with the State Government moving 600 jobs to the Ballarat Civic Hall site in 2020, upgrades to the railway line to decrease commuter time to Melbourne and redevelopment of the Ballarat Station precinct.

July 1st saw the commencement of the new First Home Owner’s Grant, with stamp duty concession on existing dwellings under $600,000 and an increased incentive to newly built homes. In the lead up to July 1st, first home buyers withdrew from the market waiting to cash in on the government incentives. As the financial year clicked over, central areas of Ballarat experienced the greatest growth in prices.

The volume of vacant land sales spiked in new residential estates as of July 1st. Ballarat has no shortage of vacant land for sale with new residential estates offering land in Bonshaw, Lucas, Delacombe and Alfredton. Prices have eased for land due to the oversupply over the past few years.

Stats are yet to be released for the month of July but the general consensus amongst property professionals is there is greater demand and first home buyers are making up a considerable portion of buyers in the market in central areas. Outer areas of Ballarat including Sebastopol, Wendouree and Miners Rest remain steady, recording limited growth.

Bendigo

The Bendigo residential market has seen consistent growth over the past 12 months with increasing government support for first home buyers in regional areas. This increase in funding has seen a lift in new home construction rates in the Bendigo area particularly in the new estates around Epsom, Marong and Huntly.

With property prices rising in the capital cities, regional centres such as Bendigo offer first home buyers an opportunity to live in a new home within 20 minutes of a CBD for less than half a million dollars. For homes under $350,000 in value, rental rates are only marginally cheaper than paying a mortgage. With the Calder Highway and V-line trains connecting Bendigo to Melbourne within two hours of travel, Bendigo is far from isolated.

Echuca

Home ownership has taken a variety of forms in recent times with a key focus being on new developments on account of very little existing housing stock being available in the marketplace. Consequently the combination of land price, building cost and final value have come into sharper focus for most home owners, with most focused on West Echuca on the Victorian side and West Moama on the New South Wales side.

Horsham

The reintroduction of the first home owner’s grant by the federal government has seen an increased confidence in the residential property market in Horsham in recent months, with an increased volume of sales, Many young couples and families are entering the property market for the first time, either buying an existing home or buying land within a new residential estate to build a home.

Coming off an above average harvest for the 2016 season and early signs of a relatively good harvest for the 2017, the Horsham region has also seen many farmland transaction occurring and consequently seeing farmers retiring into the city centre, looking for modern established homes to enjoy their retirement in.

With the housing market within the Horsham region still ranging between $200,000 and $400,000 the Australian dream of owning your own home is still very much obtainable and evident given that the rental market only makes up approximately 29% of the region’s occupancy.

Mildura

Home ownership in Mildura is still a realistic goal, with the median house price being around $260,000 and for units $180,000. Families and older couples make up the largest percentage of people living in Mildura and the majority of buyers in Mildura are owner-occupiers. Statistics prepared by Corelogic tell us that the average time a home in Mildura is held is around eight years, which supports our observation that many buyers gradually trade their way up from entry level homes to better standard homes as their financial circumstances improve.

Over the past ten years, first home buyers have shown a willingness to take on more debt in order to acquire more expensive first homes. No doubt the low interest rate environment has contributed to this confidence, however it appears that many first home buyers have much higher expectations than previous generations. Most first home buyers in Mildura are looking for modern detached dwellings in better locations and will typically spend from $280,000 to $350,000.

The presence of attractive first home owner grants has made building a home an attractive option for many young people. Currently there is $20,000 available to first home buyers who build a home in Victoria and $10,000 in NSW, which when combined with the stamp duty exemptions currently available make this attractive for many people. We note however, that the cost of land and building has increased in recent years by at least this amount, making this option less attractive than it once would have been.

Townhouses and units are mostly being purchased by either investors or retirees, attracted by the lower maintenance requirements. There has been a trend in the past five to ten years for many empty nesters to move from their large family homes to new townhouses on compact lots. The development of around 70 residential lots within part of the Mildura golf course has met with strong demand from this buyer segment who are typically spending between $450,000 and $650,000 to acquire good standard housing on lots of around 500 square metres.

Buyers in Mildura still have a preference for detached dwellings and the relative affordability of land makes this possible.

Our constant theme is that owner-occupiers (and tenants) always show a preference for homes which have functional outdoor living areas designed to be shaded in the summer months. Mildura has long, hot summers, and the ability to spent time outdoors is an important consideration for home buyers.

Warrnambool

Warrnambool’s residential market is somewhat removed from the affordability issues which dominate the metropolitan markets. As such, home buyer activity continues to occur across most demographic groups within Warrnambool.

First home buyers within Warrnambool are currently operating in the $300,000 to $400,000 price range. However a recent trend for first home buyers has been going down the path of a house and land package. This is on the back of recent government incentives that offer stamp duty exemptions and construction allowances for properties built within regional areas.

Financially secure families are looking at purchasing well established properties located within Central Warrnambool or selective north Warrnambool pockets, with retirees or couples looking to downsize generally looking at the Central Warrnambool market. Being surrounded by a larger rural and rural lifestyle demographic we are seeing a current trend with older couples in these areas choosing to cash out, downsize and bank or invest any surplus funds. These buyers focus on low maintenance, centrally located properties and operate at a higher price point than most family buyers. Both demographics are confident with purchasing within the Warrnambool market as owner-occupiers.

Demand from home buyers remains focused on traditional detached housing. This tendency to remain traditional rather than seek out attached housing options is solely due to very limited stock of this type in area.

The great Australian dream of home ownership is alive and well in Warrnambool. This is due to the continuing release of new residential land supply on the city’s extremities, a steady median price as well as the existing low-cost, affordable pockets in area such as Dennington and North Warrnambool.

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