Hotspot: Geelong's on the ball with rising yields

Hotspot: Geelong's on the ball with rising yields
Larry SchlesingerDecember 8, 2020

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

 

Not content with being home to the premier football team in Australia, Geelong is also developing into an investment hotspot, with its more affordable house prices luring Melburnians willing to make the commute.

Geelong, which a population of about 180,000 people, is an hour’s drive or train ride from the Melbourne CBD but has median house prices significantly below those of its big-city neighbour.

The regional city has been picked as a hotspot by hotspotting.com.au’s Terry Ryder and is ranked 74th on Your Investment Property magazine’s Top 100 suburbs survey earlier this year.

Ryder tells Property Observer Geelong is a good long-term prospect for investors, and will get stronger.

“It has quite a lot to offer, and is viable alternative to Melbourne,” Ryder says.

“It is considerably cheaper. As a general rule of thumb, a house in Geelong is $100,000 cheaper than Melbourne. Land is also cheaper to buy.”

A ring road currently under construction will improve links to Melbourne, as will a $4 billion rail connection, also under way.

“There are also plans to upgrade Avalon to a second international airport and extends rail links from Melbourne to the airport,”Ryder says.

Currently, a peak express train from Railway Terrace, Geelong to Melbourne’s Southern Cross takes 53 minutes.

Other factors in its favour, according to Ryder, are its water-based lifestyle centred around the bay and surf beaches and strong job prospects.

Ryder says plans to relocate car import and export trade from the Port of Melbourne to the Port of Geelong will bring up to 1,500 jobs to the region.

And he says the success of footy team should also not be underestimated in terms of attracting people to the region.

“Having a team that wins does make a difference. It generates confidence in the community and has economic benefits, too,” he says.

Building activity appears to be picking up, with a total of 249 domestic new building permits issued in the City of Greater Geelong in June 2011, an increase of 35.3% on the previous month, according to the latest economic report for the region. 

House and unit prices in Geelong have performed well over the last 12 months, exceeding price growth in the Melbourne unit market and not far behind house price growth, according to Real Estate Institute of Australia’s June quarter figures. 

During the three-month period to June, 438 houses were sold, with a median price of $370,000. Cheaper houses are priced just above $300,000 while more expensive properties sell around the $480,000 mark

House prices are down 3.7% over the June quarter but for the year are up a 7.2%.

Over the same period, 69 units changed hands at a median price of $317,000.

Unit prices are up 8.7% over the June quarter and up 13.2% for the year to June.

How Geelong stacks up against Melbourne and other regional cities

 

Distance to Melbourne

Median house price

Change over 12 months

Median unit price

Change over 12 months

Geelong

 

80 kms

 

$370,000

7.2%

$317,000

13.2%

Ballarat

 

120 kms

$289,000

24.4%

$230,000

26%

Bendigo

 

160 kms

 

$288,000

7.4%

$200,000

-21.6%

Melbourne

 

 

$590,000

9.3%

$475,000

8.1%

Source: REIA market facts

According to the Victoria’s Department of Human services, the median rent on a one-bedroom flat in Geelong is $178 per week, compared with $155 a year ago, and a two-bedroom flat rents for a median of $260 (compared with $257 a year ago).

The REIA puts the median rent on a three-bedroom house at $300 per month, down 3.2% over the June quarter but up 7% for the year.

Four-bedroom houses rent for a median $380 a week, up 5.6% compared with the same quarter last year.

According to RP Data, median rental yields in Greater Geelong are just under 4%. In Geelong West, yields are around 4.4% (median sales price of $386,000) and in North Geelong yields are around 4.6% (median sales price of $314,000).

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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