Geelong house and apartment prices now in decline: HTW property clock

Geelong house and apartment prices now in decline: HTW property clock
Geelong house and apartment prices now in decline: HTW property clock

Geelong, one of the nation's strongest performing property markets, has begun its price decline, according to property valuation firm Herron Todd White.

Both its houses and units have slipped into the starting to decline bracket in the May property clock, along with the north-east New South Wales city of Tamworth.

The prices are down for their 2017 peak, although no apparent signs of loss taking.

There was however no price growth at 403/8 Gheringhap Street Geelong which recently fetched $465,000, the same off the plan price paid in 2011 for the two bedroom apartment.

It was currently tenanted to at $420.00 per week until October with the agent advising it was "well priced for this type of property considering the location and the rental return."

The nearby $430,000 apartment at 701/8 Gheringhap Street Geelong sold at the lower end of its guidance.

The seventh floor one bedroom unit was listed with $429,000 to $459,000 price guidance, having last sold at $380,000 in 2013.

There was also little price growth at the three bedroom town house at 39 Alexandra Avenue Geelong.

It sold recently at $1.05 million, having traded at $1.02 million in October 2017.

Despite the start in declining prices, Herron Todd White noted there was an ongoing severe shortage of property in relative to rental demand.

The demand for new houses is strong, but the volume of house sales is declining.

Property Observer noted a drop in the auction clearances rates last August, from 80 percent to 50 percent.

Earlier this year more than a third of Melbourne and Geelong land lots were being sold are resales.

It was only late last year that CoreLogic's Cameron Kusher's research found Geelong leading the way in house and unit markets.

Last December HTW noted Geelong, the second largest Victorian city outside of Melbourne, was defying the emerging downward market trend amid a tightening of lending rules favouring regional markets and first home owner grants for regional areas as the twin major buoyant factors.

Bucking the decline trend with its recent $570,000 sale was the two bedroom house at 1/17 Brownbill Street, at well above the $470,000 to $510,000 price guidance.

The Geelong decline extends to its house and land.

"Although the Geelong market has cooled, we are still seeing construction values stacking up against comparable properties sold, however this may not be the case moving forward," HTW said in their May review.

To enlarge HTW's housing property clock, click here.

Geelong house and apartment prices now in decline: HTW property clock

"There are concerns about the market slowing in Geelong, with longer days on market, increased stock levels and changes in lending policy in the wake of the royal commission into banking," HTW noted.

"There are still good opportunities in the current climate."

Geelong currently has a number of large englobo developments with land for sale.

First home buyers are being drawn to land developments in Armstrong Creek, Torquay, Drysdale and Ocean Grove.

Around 30 to 40 percent of sales within new developments are first home buyers.

Developers are selling 350 sqm blocks for $430,000, with building rates in the Geelong region varying from $1,200 to $1,500 per sqm for a standard volume build, increasing to anywhere between $2,000 and $5,000 per sqm for a custom build.

Herron Todd White questioned, in the current property climate, whether purchasing land in a new development is a good idea for first home buyers.

"Typically, land within these locations doesn’t have as high capital return due to the oversupply levels," they said.

They added affordability will likely be a key factor, with the more established residential areas often having a higher entry point of value, but the rewards are greater.

"Often it’s the established areas that tend to have a higher return on value due to the fact that a modern dwelling is constructed within a location closer to established infrastructure.

Geelong units have also started to decline, joining the Central Coast and Coffs Harbour, as well as the Gold Coast. Tamworth too has seen it move from the peak of the market into a declining market.

To enlarge HTW's unit property clock, click here.

Geelong house and apartment prices now in decline: HTW property clock




Joel Robinson

Joel Robinson

Joel Robinson is a property journalist based in Sydney. Joel has been writing about the residential real estate market for the last five years, specializing in market trends and the economics and finance behind buying and selling real estate.

Geelong Herron Todd White

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