Regional VIC Property Market Update October 2020

By Herron Todd White
October 2020

Geelong Property Update

Greater Geelong has continued to see strong growth in the vacant land market. Much of the region’s growth and activity is on the back of government grants, with first home owners jumping at the opportunity to secure available sites. Emerging suburbs of Lara, Ocean Grove and Curlewis have set the tone in the vacant land market. Lara and Ocean Grove have seen the most growth, recording a 17 per cent and 28 per cent increase respectively in the number of vacant land sales over the past 12 months. In the past six months, Curlewis has recorded a 2.5 per cent increase in median sale price (CoreLogic). The strong growth seen across the peninsular region is a direct result of historically low interest rates and people choosing to escape central locations, with buyers prioritising lifestyle locations over accessibility.

House Construction has continued to be a popular choice for Geelong residents. First home buyers are extremely active and driving the market, taking full advantage of the government grants and the promotions developers are offering. Land developments such as Armstrong Creek and Charlemont are proving to be the most popular Charlemont has recorded a five per cent increase in median sale price over the past six months (CoreLogic). The affordability of these suburbs is the main attraction as purchasers can snap up a four-bedroom family home for well below $600,000, easily below the cut-off for the Home Builder grant.

The trend of Melbourne and Melbourne fringe residents prioritising lifestyle locations is still occurring, with Bellarine Property agents indicating that these buyers are driving the market, many purchasing sight unseen. Potential oversupply will need to be monitored if government stimulus packages are removed over the coming months.

Perron King
Director

Mildura Property Update

With the introduction earlier this year of additional government stimulus packages for the construction of new dwellings, we have seen an increased demand for vacant allotments, with some strong recent sales evidence of this, however at present, there is also a limited supply of vacant land in the Mildura region, with several large developments still months away from titles being issued. This is resulting in purchasers competing for the limited land available at present.

Traditionally the majority of growth and new developments has been located towards the Mildura South area, however more recently several large developments have been completed in Irymple, Red Cliffs and Gol Gol. These surrounding towns have seen a significant appreciation of land values, particularly in Irymple.

An example of this uplift is the recent sale of 8 Kensington Court, Irymple for $219,500. This property comprises a 1005 square metre allotment in a modern subdivision set between the Irymple Primary School and Irymple Secondary College. During 2019, similar sized allotments in this subdivision were selling for around $165,000.

It will be interesting to see whether demand continues at the same pace as we move into 2021. It is possible that sales volumes will reduce to more typical levels at the same time as a number of large subdivisions come on line. At this stage it is difficult to see land values rising further in the current market cycle.

House construction activity is expected to continue at strong levels in the short to medium term, with most of the current land buyers expected to build rather than sit on their land. This will provide a welcome boost to our local economy. For local people in secure employment, investing in their homes is likely to remain a focus, given the inability to travel and general fear that a national recession will drag down other forms of investments, such as the share market.

Jake Garraway
Residential Valuation Manager

Warrnambool Property Update

Vacant residential land in the Warrnambool area has seen strong demand in recent months and despite new subdivisions entering the market, it appears that the thirst of buyers across a number of price points is yet to be quenched.

Buyers targeting a lower entry point have few options available with a number of relatively affordable subdivisions located in the north Warrnambool area starting from circa $150,000. The family-friendly suburb of Dennington, located west of the Warrnambool CBD, has been selling well with standard 600 to 700 square metre parcels of land typically moving for $110,000 to $130,000.

Mid-level buyers in the $200,000 to $250,000 range have fancied the Mervue Estate in south Warrnambool. Mervue offers buyers good proximity to the golf course, beach and city centre. Parcels within this subdivision are larger than those found in north Warrnambool with sizes ranging from 900 to 1,200 square metres.

The increased sales activity in the residential land market in Warrnambool has, by association, led to a rise in new home construction as evidenced by a jump in the volume of construction valuation reports completed by the Warrnambool office. Construction contracts typically stack up with the combined cost of land and construction being supported by market evidence. Further proof of the booming construction demand comes in the form of conversation with a number of builders. From the locally founded and operated builders to larger national branded builders, all are reporting a huge spike in new contracts.

Looking beyond the current low interest rate environment, solid investment returns offered in the Warrnambool region and depreciation benefits attributed to new dwellings, the recent government stimulus measures are acknowledged as a key driver of the construction demand. Interestingly, the same builders reporting increased construction interest also report a general lack of understanding by potential clients as to the details and eligibility requirements for government grants and incentives.

Looking forward, Warrnambool is in a positive position with regard to vacant land uptake however we will be monitoring the impact on values and demand as government initiatives are rolled back and a number of new estates enter the market.

Adrian Castle
Certified Practising Valuer

Shepparton Property Update

Vacant land under $200,000 due to be titled in 2020 was all but sold out by early August, with only a few remnant blocks remaining. There are a few estates with larger lot offerings around the half acre and commanding over $200,000 which still have some land available, but these areas are always slower to move as they represent the top end of the local estates and appeal to a more discerning buyer.

Some blocks have been re-sold during this crazy time and have seen $20,000 increases in value in as little as six months. The rush of purchasers came as a direct result of the federal government’s $25,000 grant, which sees first homebuyers in the region eligible for up to a combined $45,000 in state and federal government grants.

Nearly all of the volume builders have been turning away customers who want to enter into a building contract before the 31 December deadline for the federal grant, as they simply don’t have the capacity. One volume builder has reported selling 12 months’ worth of new homes in eight weeks.

The majority of construction valuations are stacking up in the sub $550,000 bracket, although homes that fall north of $550,000 are increasingly hard to stack up in the area. However with the heat that is in the regional Victorian property market at the moment, this may shift quite quickly once more homes are offered for sale, allowing values to rise.

Local agents have reported that a number of capital city residents are looking to make the move to the region due to COVID-19 forcing many businesses to embrace the online model. This allows families to chase lifestyle when choosing where they want to live. The region still offers very good buying compared to other large regional centres.

Luke Jorgensen
Property Valuer