Bendigo a rental property goldmine for 21st-century speculators

Bendigo a rental property goldmine for 21st-century speculators
Bendigo a rental property goldmine for 21st-century speculators

As we look to what's ahead for 2012, Property Observer is republishing some of our most noteworthy stories of 2011.

 

The gold rush is long past, but Bendigo’s housing market is shaping up as a treasure trove for property investors, according to the latest data released by the Real Estate Institute of Victoria. 

Bendigo, about 130 kilometres north of Melbourne and with a population of around 100,000, has the tightest rental vacancy rate in Victoria, according to the REIV. 

During the month of July, the vacancy rate tightened from 0.5% to 0.3%. 

Rental yields for houses and apartments in Bendigo are around 5%, compared with 3.7% for Melbourne houses and 4.3% for Melbourne units, according to RP Data figures.

According to SQM research, renters make up about a third of the Bendigo market. 

In addition to its strong rental market, the regional centre has also experienced solid house price appreciation, with the Bendigo median house price rising 4.5% in the June quarter to $287,500 – beating regional centres Ballarat (up 1.3%) and Geelong (down 3.9%), according to the REIV. 

Despite this growth, Bendigo houses are substantially cheaper than Melbourne, where the median house price is still above $500,000 despite recent declines. 

According to REIV spokesman Robert Larocca there are two opposing forces spurring on the Bendigo market. 

“On the one hand Bendigo is benefiting from very good transport connections to Melbourne, in fact the corridor between the two cities is seeing city type prices in some centers. But on the other hand as the state’s population has grown the rate of new dwelling construction has not kept pace,” he says. 

“There is also a particular issue in Bendigo that at the time the vacancy rate has been below 1% the proportion of rental homes deemed affordable has dropped from 72% to 50% of rental homes.” 

There are 208 properties listed for rent in Bendigo on Realestate.com.au, with two-thirds of these houses. 

Weekly rentals for houses start from about $200 for a two-bedroom house to more than $600 for Victorian-era houses close to the Bendigo CBD. 

The cheapest unit for rent (also the cheapest rental in Bendigo) is a one-bedroom unit on Rowan Street (pictured above) close to the Bendigo CBD asking $135 per week with Danny Clarke from The Professionals handling the listing. 

At the top end of the scale is “Hustlers Heights” (pictured above), a stately three-bedroom Victorian house offered at $700 per week, fully furnished by Emma Morison from Tweed Sutherland First National Bendigo. 

Despite the apparent shortage of rental properties, Hustlers Heights has been listed since July 30 with its close proximity to the Capital Theatre, Art Gallery and the cafes of View Street not proving enticing enough to tempt anyone to part with $700 every week. 

Nathan Ludeman, property department manager from Tweed Sutherland First National Bendigo, says the last couple of months demand for rental property has actually slowed down. 

“We have a couple of vacancies at the moment, but that is quite unusual – over the last 18 months to two years there has been a zero vacancy rate. Everything was leased.” 

He puts the current availability of rental properties to seasonal factors: “The market usually slows down over the colder months.” 

Ludeman, who has lived his whole life in the town, says there are a lot of homes under construction at present including subdivisions in and around the outskirts of the city. 

“There are a lot of people moving from Melbourne. The highway has made it a lot quicker to commute – it takes about an hour and 40 minutes – and property is much cheaper than in Melbourne,” he says. 

As for the appeal of the region, he says while it is not dependent on any one industry, it has every sector covered and offers a reasonably relaxed place 

“It’s a smaller version of Geelong, without the beach,” Ludeman says. 

Another local property manager, Anita Harrington from Tony Harrington Estate Agents – Bendigo, says demand for rentals is enormous. 

“We are currently sitting with one property vacant,” she says. 

Harrington says rentals get snapped up very quickly, with new tenants ready to move in almost immediately after an incumbent vacates. 

“It can be quite heartbreaking. There are often people crying because they cannot get a rental property.” 

Harrington says there are a lot of Melbourne investors dipping their toes into the Bendigo market as well as core investors from Bendigo who own multiple properties and continue to buy.

The city will also benefit from a new world-class hospital with the Victorian government throwing $630 million into the New Bendigo Hospital project due to commence in December and due to be completed in 2016. 

Bendigo ranked 69 on Your investment property’s Top 100 Suburbs survey earlier this year. 

The survey quoted PRDnationwide figures, which found that Bendigo’s house market recorded growth of 12.3% in 2010, and has maintained a 10% average annual growth rate over the past decade. 

PRDnationwide research analyst Dan O’Halloran highlights its relatively close proximity to Melbourne and its role as one of Victoria’s key rural hubs as its key attributes. 

“The area has a diverse and robust economy that comprises mining, agriculture, manufacturing, tourism, health, and a strong financial presence, with Australia’s only provincial stock exchange,” he says. 

“The Bendigo real estate market is large enough to maintain a reasonable level of supply and demand throughout tough economic conditions, which makes it an attractive and secure investment option.” 

“Bendigo’s relative affordability compared to Melbourne, coupled with a strong community vibe, assists to attract many new homeowners to the area each year, while a strong rental yield of 6% per annum creates an enticing option for property investors,” he concludes.

Main photo courtesy of Tourism Victoria

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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